Condition: The Organization tracks grants by individual cost-centers, which allows for total revenue and total expenditures by grant to be easily identifiable. In preparation of the Schedule of Expenditures of Federal Awards (SEFA), the Organization did not include a significant grant that is sourced from federal funds and required for testing. Criteria: Section 2 CFR 200.510(b) of the Uniform Guidance requires that an auditee prepare a schedule of expenditures of federal awards, which includes individual federal programs by federal agency and total federal awards expended for each individual federal program and Assistance Listing Number. Management is responsible for establishing and maintaining an effective system of internal control to allow for complete and accurate preparation of the SEFA. Cause: The Organization received a new one-time agreement during 2024, and the granting agency did not provide sufficient information for the Organization to clarify the funds were derived from federal funds. As such, the finance team did not include the grant expenditures in the schedule of expenditures of federal awards. Effect: Inaccurate reporting of federal expenditures could result inaccurate major program determinations, risk assessments, identification of compliance requirements, and ultimately incomplete reporting of federal funds expended to granting agencies. Questioned Costs: None reported. Context/Sampling: Sampling was not used. Repeat Findings From Prior Year: No. Recommendation: We recommend management review all new grant agreements for indicators of federal awards (such as an Assistance Listing or CFDA number, references to federal regulations, references to federal laws or bills, etc.), and communicate with granting agencies for clarity. We recommend management receive confirmation in writing from any granting agencies about the source of any grants, when there is doubt about whether a grant is federally-sourced or not. Management Response: Management agrees with the recommendation and will ensure both program and financial staff understand the importance of determining the source of new grant funds, to ensure the schedule of expenditure of federal awards is accurately prepared.
PREPARATION OF SCHEDULE OF EXPENDITURES AND FEDERAL AWARDS QUESTIONED COSTS: N/A Criteria: The Uniform Guidance Subpart F section 200.510 requires the preparation of the Schedule of Expenditures of Federal Awards (SEFA) that includes an accurate reporting of federal awards expended based on the terms and conditions of the grants along with the amount of funds disbursed to sub-recipients. In order for the SEFA to be prepared accurately and properly report the amounts expended for federal awards, a system of controls should be in existence that includes the identification of federal expenditures, timely and accurate preparation and review of the amounts reported on the SEFA. Condition: The initial SEFA prepared by the School Bord’s did not accurately include or identify all the federal award expenditures. The initial SEFA provided for audit included $119,736,508 of expenditures while the final SEFA included $186,491,326. This finding is repeated from the prior year. See the Summary Schedule of Prior Year Findings and Questioned Cost item 2023-003. Universe/ Population: None Sample size: None Cause: The grant awards or agreements were not properly interpreted or reviewed to identify or determine the proper amount to be reported as expenditures or SEFA. The 2 CFR Part 200, Appendix XI, Compliance Supplement publishes and distributed by the President of the United States’ Office of Management and Budget includes requirements for SEFA reporting that were not complied with. Effect: The SEFA provided to us for audit did not contain all the federal programs or the correct amounts of federal expenditures based on the terms of the grant awards and requirements to reporting on some of the federal programs reported. Inaccuracies or excluding information on the SEFA causes delays in completing the single audit and risks filing a SEFA that is incomplete or inaccurate. In addition, auditors may not identify and test the correct major federal programs in accordance with the Uniform Guidance. Recommendation: The School Board should strengthen its controls including its review and approval processes over the identification of federal programs, and the information and balances that are accumulated and reported on the SEFA to make sure the expenditures reported are an accurate representation of federal expenditures. View of Responsible Official: Management agrees with finding. Disaster Grants through FEMA are managed by rules and processes that are not easily accounted for in traditional accounting systems. Procedures will be strengthened to fully and accurately identify all federal program expenditures and record in the appropriate accounting funds.
Assistance Listing Number, Federal Agency, and Program Name 21.011, U.S. Department of the Treasury Capital Magnet Fund Federal Award Identification Number and Year Year ended June 30, 2024 Pass through Entity Ohio Department of Development Supportive Housing Program Finding Type Significant deficiency Repeat Finding No Criteria Per 2 CFR Section 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 determined in accordance with Section 200.502. Condition The expenditures were reported for the Capital Magnet Fund throughout the award period from the year ended June 30, 2019 to the year ended June 30, 2024 on the schedule of expenditures of federal awards (SEFA) but did not accurately report the amount of administrative expenditures incurred during the performance period, and, therefore, the SEFA was not complete and accurate for the year ended June 30, 2019 to 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 The Organization did not accurately report the administration costs on the SEFA. The Organization incorrectly omitted $375,000 of administration costs that were incurred during the year ended June 30, 2019; however, management implemented controls during the year ended June 30, 2024 that discovered the error, and, therefore, the $375,000 of omitted costs were included on the SEFA during the year ended June 30, 2024. Cause and Effect The Organization did not review all previously reported expenditures on the schedule of expenditures of federal awards for the Capital Magnet Program over the award period and omitted $375,000 of expenditures related to funding received from the Capital Magnet Fund for administrative costs. Recommendation We recommend the Organization implement a process and controls to have additional review of the SEFA compared to the Capital Magnet Performance Report to ensure the expenditures on the SEFA are complete and accurate and any errors are discovered and corrected timely. Views of Responsible Officials and Corrective Action Plan Management has implemented procedures and controls to ensure reports are reviewed prior to submission and distributed funds are reported properly and in the correct period.
Reference Number 2024-005 – Incomplete Schedule of Expenditures of Federal Awards Evaluation of Finding Material Weakness and Noncompliance – Various Federal Programs Criteria According to the Government Auditing Standards (Yellow Book) and the Uniform Guidance, 2 CFR Part 200, Subpart F—Audit Requirements, sections 200.508 and 200.510, entities receiving federal awards must prepare and submit a complete and accurate Schedule of Expenditures of Federal Awards (SEFA) as part of their annual financial reporting. This schedule is crucial for auditors to determine major programs and conduct the necessary audits in compliance with federal regulations. Condition The City failed to provide a complete SEFA for the fiscal year, leading to inaccuracies pertaining to the ARPA program. This omission resulted in a direct impact on the determination of major programs. Cause The incomplete SEFA was caused by a lack of oversight and insufficient internal controls within the City's financial management department. Effect or Potential Effect The failure to provide a complete SEFA has significant implications, including: • Inaccurate determination of major programs, which can affect the scope and quality of the audit process. • Increased risk of non-compliance with federal regulations, potentially leading to financial penalties and loss of federal funding. Context The City did not submit a complete SEFA for the year ended June 30, 2024, as required by federal guidelines. This incomplete reporting could compromise transparency, affect audit procedures, and hinder compliance with federal regulations. Repeat Finding Yes, in relation to reconciliation of grant activity. Recommendation To address this material weakness, the following actions are recommended: • Develop detailed procedures and timelines: Establish and enforce comprehensive procedures and timelines for the preparation and submission of the SEFA to ensure completeness and accuracy. • Enhance staffing and resources: Allocate adequate staffing and resources to the financial management department to support the accurate compilation and timely submission of the SEFA. • Provide comprehensive training: Offer training to financial management staff on the requirements and importance of the SEFA, including techniques for ensuring its accuracy and completeness.. • Regularly audit the SEFA preparation process: Conduct regular audits of the SEFA preparation process to ensure compliance with established policies and procedures and address any deficiencies promptly. This should be completed monthly and at a minimum quarterly. By implementing these recommendations, the City can strengthen its internal controls, improve the accuracy of its financial reporting, and ensure compliance with Government Auditing Standards and other regulatory requirements. Management Response Management agrees with the finding and recommendations. The City will begin to implement policies and procedures to assist with monthly reconciliations and review processes to mitigate these errors in the future. Reference Number 2024-005 – Incomplete Schedule of Expenditures of Federal Awards Material Weakness and Noncompliance Assistance Listing Number: All Federal Programs reported on the SEFA Criteria Refer to finding 2024-005 in section II above. Condition Refer to finding 2024-005 in section II above. Cause of Condition Refer to finding 2024-005 in section II above. Effect or Potential Effect of Condition Refer to finding 2024-005 in section II above. Questioned costs None. Context Refer to finding 2024-005 in section II above. Repeat Finding Refer to finding 2024-005 in section II above. Recommendation Refer to finding 2024-005 in section II above. Management Response Refer to finding 2024-005 in section II above.
Reference Number 2024-005 – Incomplete Schedule of Expenditures of Federal Awards Evaluation of Finding Material Weakness and Noncompliance – Various Federal Programs Criteria According to the Government Auditing Standards (Yellow Book) and the Uniform Guidance, 2 CFR Part 200, Subpart F—Audit Requirements, sections 200.508 and 200.510, entities receiving federal awards must prepare and submit a complete and accurate Schedule of Expenditures of Federal Awards (SEFA) as part of their annual financial reporting. This schedule is crucial for auditors to determine major programs and conduct the necessary audits in compliance with federal regulations. Condition The City failed to provide a complete SEFA for the fiscal year, leading to inaccuracies pertaining to the ARPA program. This omission resulted in a direct impact on the determination of major programs. Cause The incomplete SEFA was caused by a lack of oversight and insufficient internal controls within the City's financial management department. Effect or Potential Effect The failure to provide a complete SEFA has significant implications, including: • Inaccurate determination of major programs, which can affect the scope and quality of the audit process. • Increased risk of non-compliance with federal regulations, potentially leading to financial penalties and loss of federal funding. Context The City did not submit a complete SEFA for the year ended June 30, 2024, as required by federal guidelines. This incomplete reporting could compromise transparency, affect audit procedures, and hinder compliance with federal regulations. Repeat Finding Yes, in relation to reconciliation of grant activity. Recommendation To address this material weakness, the following actions are recommended: • Develop detailed procedures and timelines: Establish and enforce comprehensive procedures and timelines for the preparation and submission of the SEFA to ensure completeness and accuracy. • Enhance staffing and resources: Allocate adequate staffing and resources to the financial management department to support the accurate compilation and timely submission of the SEFA. • Provide comprehensive training: Offer training to financial management staff on the requirements and importance of the SEFA, including techniques for ensuring its accuracy and completeness.. • Regularly audit the SEFA preparation process: Conduct regular audits of the SEFA preparation process to ensure compliance with established policies and procedures and address any deficiencies promptly. This should be completed monthly and at a minimum quarterly. By implementing these recommendations, the City can strengthen its internal controls, improve the accuracy of its financial reporting, and ensure compliance with Government Auditing Standards and other regulatory requirements. Management Response Management agrees with the finding and recommendations. The City will begin to implement policies and procedures to assist with monthly reconciliations and review processes to mitigate these errors in the future. Reference Number 2024-005 – Incomplete Schedule of Expenditures of Federal Awards Material Weakness and Noncompliance Assistance Listing Number: All Federal Programs reported on the SEFA Criteria Refer to finding 2024-005 in section II above. Condition Refer to finding 2024-005 in section II above. Cause of Condition Refer to finding 2024-005 in section II above. Effect or Potential Effect of Condition Refer to finding 2024-005 in section II above. Questioned costs None. Context Refer to finding 2024-005 in section II above. Repeat Finding Refer to finding 2024-005 in section II above. Recommendation Refer to finding 2024-005 in section II above. Management Response Refer to finding 2024-005 in section II above.
Reference Number 2024-005 – Incomplete Schedule of Expenditures of Federal Awards Evaluation of Finding Material Weakness and Noncompliance – Various Federal Programs Criteria According to the Government Auditing Standards (Yellow Book) and the Uniform Guidance, 2 CFR Part 200, Subpart F—Audit Requirements, sections 200.508 and 200.510, entities receiving federal awards must prepare and submit a complete and accurate Schedule of Expenditures of Federal Awards (SEFA) as part of their annual financial reporting. This schedule is crucial for auditors to determine major programs and conduct the necessary audits in compliance with federal regulations. Condition The City failed to provide a complete SEFA for the fiscal year, leading to inaccuracies pertaining to the ARPA program. This omission resulted in a direct impact on the determination of major programs. Cause The incomplete SEFA was caused by a lack of oversight and insufficient internal controls within the City's financial management department. Effect or Potential Effect The failure to provide a complete SEFA has significant implications, including: • Inaccurate determination of major programs, which can affect the scope and quality of the audit process. • Increased risk of non-compliance with federal regulations, potentially leading to financial penalties and loss of federal funding. Context The City did not submit a complete SEFA for the year ended June 30, 2024, as required by federal guidelines. This incomplete reporting could compromise transparency, affect audit procedures, and hinder compliance with federal regulations. Repeat Finding Yes, in relation to reconciliation of grant activity. Recommendation To address this material weakness, the following actions are recommended: • Develop detailed procedures and timelines: Establish and enforce comprehensive procedures and timelines for the preparation and submission of the SEFA to ensure completeness and accuracy. • Enhance staffing and resources: Allocate adequate staffing and resources to the financial management department to support the accurate compilation and timely submission of the SEFA. • Provide comprehensive training: Offer training to financial management staff on the requirements and importance of the SEFA, including techniques for ensuring its accuracy and completeness.. • Regularly audit the SEFA preparation process: Conduct regular audits of the SEFA preparation process to ensure compliance with established policies and procedures and address any deficiencies promptly. This should be completed monthly and at a minimum quarterly. By implementing these recommendations, the City can strengthen its internal controls, improve the accuracy of its financial reporting, and ensure compliance with Government Auditing Standards and other regulatory requirements. Management Response Management agrees with the finding and recommendations. The City will begin to implement policies and procedures to assist with monthly reconciliations and review processes to mitigate these errors in the future. Reference Number 2024-005 – Incomplete Schedule of Expenditures of Federal Awards Material Weakness and Noncompliance Assistance Listing Number: All Federal Programs reported on the SEFA Criteria Refer to finding 2024-005 in section II above. Condition Refer to finding 2024-005 in section II above. Cause of Condition Refer to finding 2024-005 in section II above. Effect or Potential Effect of Condition Refer to finding 2024-005 in section II above. Questioned costs None. Context Refer to finding 2024-005 in section II above. Repeat Finding Refer to finding 2024-005 in section II above. Recommendation Refer to finding 2024-005 in section II above. Management Response Refer to finding 2024-005 in section II above.
Reference Number 2024-005 – Incomplete Schedule of Expenditures of Federal Awards Evaluation of Finding Material Weakness and Noncompliance – Various Federal Programs Criteria According to the Government Auditing Standards (Yellow Book) and the Uniform Guidance, 2 CFR Part 200, Subpart F—Audit Requirements, sections 200.508 and 200.510, entities receiving federal awards must prepare and submit a complete and accurate Schedule of Expenditures of Federal Awards (SEFA) as part of their annual financial reporting. This schedule is crucial for auditors to determine major programs and conduct the necessary audits in compliance with federal regulations. Condition The City failed to provide a complete SEFA for the fiscal year, leading to inaccuracies pertaining to the ARPA program. This omission resulted in a direct impact on the determination of major programs. Cause The incomplete SEFA was caused by a lack of oversight and insufficient internal controls within the City's financial management department. Effect or Potential Effect The failure to provide a complete SEFA has significant implications, including: • Inaccurate determination of major programs, which can affect the scope and quality of the audit process. • Increased risk of non-compliance with federal regulations, potentially leading to financial penalties and loss of federal funding. Context The City did not submit a complete SEFA for the year ended June 30, 2024, as required by federal guidelines. This incomplete reporting could compromise transparency, affect audit procedures, and hinder compliance with federal regulations. Repeat Finding Yes, in relation to reconciliation of grant activity. Recommendation To address this material weakness, the following actions are recommended: • Develop detailed procedures and timelines: Establish and enforce comprehensive procedures and timelines for the preparation and submission of the SEFA to ensure completeness and accuracy. • Enhance staffing and resources: Allocate adequate staffing and resources to the financial management department to support the accurate compilation and timely submission of the SEFA. • Provide comprehensive training: Offer training to financial management staff on the requirements and importance of the SEFA, including techniques for ensuring its accuracy and completeness.. • Regularly audit the SEFA preparation process: Conduct regular audits of the SEFA preparation process to ensure compliance with established policies and procedures and address any deficiencies promptly. This should be completed monthly and at a minimum quarterly. By implementing these recommendations, the City can strengthen its internal controls, improve the accuracy of its financial reporting, and ensure compliance with Government Auditing Standards and other regulatory requirements. Management Response Management agrees with the finding and recommendations. The City will begin to implement policies and procedures to assist with monthly reconciliations and review processes to mitigate these errors in the future. Reference Number 2024-005 – Incomplete Schedule of Expenditures of Federal Awards Material Weakness and Noncompliance Assistance Listing Number: All Federal Programs reported on the SEFA Criteria Refer to finding 2024-005 in section II above. Condition Refer to finding 2024-005 in section II above. Cause of Condition Refer to finding 2024-005 in section II above. Effect or Potential Effect of Condition Refer to finding 2024-005 in section II above. Questioned costs None. Context Refer to finding 2024-005 in section II above. Repeat Finding Refer to finding 2024-005 in section II above. Recommendation Refer to finding 2024-005 in section II above. Management Response Refer to finding 2024-005 in section II above.
Reference Number 2024-005 – Incomplete Schedule of Expenditures of Federal Awards Evaluation of Finding Material Weakness and Noncompliance – Various Federal Programs Criteria According to the Government Auditing Standards (Yellow Book) and the Uniform Guidance, 2 CFR Part 200, Subpart F—Audit Requirements, sections 200.508 and 200.510, entities receiving federal awards must prepare and submit a complete and accurate Schedule of Expenditures of Federal Awards (SEFA) as part of their annual financial reporting. This schedule is crucial for auditors to determine major programs and conduct the necessary audits in compliance with federal regulations. Condition The City failed to provide a complete SEFA for the fiscal year, leading to inaccuracies pertaining to the ARPA program. This omission resulted in a direct impact on the determination of major programs. Cause The incomplete SEFA was caused by a lack of oversight and insufficient internal controls within the City's financial management department. Effect or Potential Effect The failure to provide a complete SEFA has significant implications, including: • Inaccurate determination of major programs, which can affect the scope and quality of the audit process. • Increased risk of non-compliance with federal regulations, potentially leading to financial penalties and loss of federal funding. Context The City did not submit a complete SEFA for the year ended June 30, 2024, as required by federal guidelines. This incomplete reporting could compromise transparency, affect audit procedures, and hinder compliance with federal regulations. Repeat Finding Yes, in relation to reconciliation of grant activity. Recommendation To address this material weakness, the following actions are recommended: • Develop detailed procedures and timelines: Establish and enforce comprehensive procedures and timelines for the preparation and submission of the SEFA to ensure completeness and accuracy. • Enhance staffing and resources: Allocate adequate staffing and resources to the financial management department to support the accurate compilation and timely submission of the SEFA. • Provide comprehensive training: Offer training to financial management staff on the requirements and importance of the SEFA, including techniques for ensuring its accuracy and completeness.. • Regularly audit the SEFA preparation process: Conduct regular audits of the SEFA preparation process to ensure compliance with established policies and procedures and address any deficiencies promptly. This should be completed monthly and at a minimum quarterly. By implementing these recommendations, the City can strengthen its internal controls, improve the accuracy of its financial reporting, and ensure compliance with Government Auditing Standards and other regulatory requirements. Management Response Management agrees with the finding and recommendations. The City will begin to implement policies and procedures to assist with monthly reconciliations and review processes to mitigate these errors in the future. Reference Number 2024-005 – Incomplete Schedule of Expenditures of Federal Awards Material Weakness and Noncompliance Assistance Listing Number: All Federal Programs reported on the SEFA Criteria Refer to finding 2024-005 in section II above. Condition Refer to finding 2024-005 in section II above. Cause of Condition Refer to finding 2024-005 in section II above. Effect or Potential Effect of Condition Refer to finding 2024-005 in section II above. Questioned costs None. Context Refer to finding 2024-005 in section II above. Repeat Finding Refer to finding 2024-005 in section II above. Recommendation Refer to finding 2024-005 in section II above. Management Response Refer to finding 2024-005 in section II above.
Condition: During our audit we reviewed the expenditures included on the Organization’s schedule of expenditures of federal awards. We noted the Organization did not include all federal expenditures incurred during the reporting period. Criteria: As described in 2 CFR § 200.510(b) the Organization is required to prepare a schedule of expenditures of federal awards for the period covered by the auditee’s financial statements. This schedule must include total federal awards expended. Cause: The Organization utilizes an outsourced accountants to assist with the management of the Organization’s finances. During the year the Organization received a grant related to the construction of a community center. The Organization hired another contractor to assist with the construction of the community center. There are multiple entities with unique understanding of the finances tied to the federal program selected for testing. Effect: Due to not including all federal expenditures on the schedule of expenditures of federal awards this caused the schedule to be understated to a material degree. Recommendation: After thoroughly reviewing the unique circumstance that led to this audit finding, we have determined that it is highly unlikely to recur. Given the organization's strong compliance history and familiarity with SEFA reporting under Uniform Guidance, we do not see a cost-effective benefit to revamping internal controls specifically for this issue. Instead, we recommend continuing to; review government awards, provide refresher trainings to staff, and conduct periodic reviews of internal controls to ensure ongoing compliance. These measures will effectively address the finding without incurring unnecessary costs. Views of Resposible Officials: Management agrees with the finding.
2024-001 Improve Internal Controls over the Preparation of the Schedule of Expenditures of Federal Awards (SEFA) Federal Program(s) Information Federal Agency: Environmental Protection Agency Award Name: Drinking Water State Revolving Fund Assistance Listing Number: 66.468 Award Year: 2024 Type of Finding Compliance Internal Control over Compliance – Significant Deficiency Criteria or Specific Requirement Per 2 CFR 200.510(b), auditees must prepare a complete and accurate Schedule of Expenditures of Federal Awards (SEFA) for the period covered by the auditee’s financial statements. The SEFA must identify all federal awards expended, organized by federal program and Assistance Listing Number (ALN), and include all required disclosures. Condition and Context While preparing its draft SEFA, the City incorrectly classified $3,473,784 in federal expenditures as Drinking Water State Revolving Fund when those expenditures should have been classified as Coronavirus State and Local Fiscal Recovery Fund program expenditures. As a result of the initial improper expenditure amounts, the auditors’ assessment over major program determination was impacted. The misclassification was limited to the preparation of the SEFA and there was no impact on amounts reported to and/or claims for reimbursement from the respective funding source(s). This classification error was corrected for purposes of the final SEFA. Cause The City did not have adequate controls in place in order to ensure the complete and accurate preparation of the SEFA, including reconciling federal expenditures reported in the general ledger with the information included on the SEFA and verifying the correct allocation to the proper federal programs. SECTION III – FEDERAL AWARD FINDINGS AND QUESTIONED COSTS (CONTINUED) Effect or Potential Effect Due to the weakness in internal controls noted above, there is a risk that amounts reported on the SEFA are not complete and accurate. The lack of a complete and accurate SEFA may impact the determination if a single audit is required, as well as major program determination. Recommendation The City should ensure that adequate procedures and controls are in place to ensure that the SEFA is complete and accurate. This should include controls requiring the reconciliation of federal expenditures to the appropriate supporting documentation (e.g., general ledger, grant reports, etc.) and formal review by a knowledgeable individual following preparation of the SEFA. Views of Responsible Official Management’s corrective action plan is included at the end of this report after the Schedule of Prior Year Findings.
Finding 2024-004 Accounting for Grants, Schedule of Expenditures of Federal Awards, and Fiscal Man-agement (Material Weakness) Assistance Listing Number and Title: 84.041 Impact Aid Name of Federal Agency: U.S. Department of Education Assistance Listing Number and Title: 84.010 Title I Name of Federal Agency: U.S. Department of Education Assistance Listing Number and Title: 10.553 and 10.555 National School Lunch Breakfast and Lunch Name of Federal Agency: U.S. Department of Agriculture Criteria: CFR Part 200.508, CFR Part 200.510, Auditee Responsibilities state that the auditee must prepare the Sched-ule of Expenditures of Federal Awards, which must list individual Federal awards by Federal Agency, including the to-tal Federal awards expended, name of the pass-through entity, CFDA number, and total amount provided to subrecipi-ents. The information contained in the Schedule of Expenditures of Federal Awards should be derived from and relate directly to the underlying accounting and other records used to prepare the financial statements. Condition: The Schedule of Expenditures of Federal Awards (SEFA) was presented for audit with values that were not reconciled with the general ledger, and contained inaccuracies, including: • Overclaimed revenues for Title I • Inability to provide sufficient documentation of Impact Aid revenues and specific Impact Aid program infor-mation • Incorrect reporting of state and federal revenues for National School Lunch Program. Cause: The District does not have effective internal control over the preparation of the Schedule of Expenditures of Federal Awards. The district did not reconcile the expenditures reported on the SEFA with the amounts reported on the district's general ledger. Effect or Potential Effect: Potential understatement or overstatement of expenditures could exist in the Schedule of Expenditures of Federal Awards and not be detected and corrected. Because the SEFA was completed incorrectly, and not reconciled to the general ledger, the financial statements were materially misstated prior to the auditor's adjust-ments. Questioned Cost: No Context: Lack of adequate controls over the Schedule of Expenditures of Federal Awards and related accounting re-sulted in the following: SEFA was originally presented for auditors with incorrect information, and not reconciled to the general ledger Repeat of a Prior-Year Finding: No Recommendation: We recommend that the District establish policies and procedures to ensure that all Federal awards are identified and reported accurately on future SEFAs. Internal controls should be designed to prevent, detect, or cor-rect errors in a timely manner by performing periodic reconciliations of the SEFA information to the general ledger throughout the fiscal year. The District should provide appropriate training to staff who are assigned to prepare and re-view the SEFA. District’s Response: The District acknowledges the deficiencies. Corrective Action Plan: The District will establish policies and procedures to ensure that all Federal awards are identi-fied and reported accurately on future SEFAs. Planned Implementation Date: August 1, 2025 Responsible Person: District Business Manager Section IV—Summary Schedule of Prior Audit Findings There were no findings for the fiscal year ended June 30, 2023.
Finding 2024-004 Accounting for Grants, Schedule of Expenditures of Federal Awards, and Fiscal Man-agement (Material Weakness) Assistance Listing Number and Title: 84.041 Impact Aid Name of Federal Agency: U.S. Department of Education Assistance Listing Number and Title: 84.010 Title I Name of Federal Agency: U.S. Department of Education Assistance Listing Number and Title: 10.553 and 10.555 National School Lunch Breakfast and Lunch Name of Federal Agency: U.S. Department of Agriculture Criteria: CFR Part 200.508, CFR Part 200.510, Auditee Responsibilities state that the auditee must prepare the Sched-ule of Expenditures of Federal Awards, which must list individual Federal awards by Federal Agency, including the to-tal Federal awards expended, name of the pass-through entity, CFDA number, and total amount provided to subrecipi-ents. The information contained in the Schedule of Expenditures of Federal Awards should be derived from and relate directly to the underlying accounting and other records used to prepare the financial statements. Condition: The Schedule of Expenditures of Federal Awards (SEFA) was presented for audit with values that were not reconciled with the general ledger, and contained inaccuracies, including: • Overclaimed revenues for Title I • Inability to provide sufficient documentation of Impact Aid revenues and specific Impact Aid program infor-mation • Incorrect reporting of state and federal revenues for National School Lunch Program. Cause: The District does not have effective internal control over the preparation of the Schedule of Expenditures of Federal Awards. The district did not reconcile the expenditures reported on the SEFA with the amounts reported on the district's general ledger. Effect or Potential Effect: Potential understatement or overstatement of expenditures could exist in the Schedule of Expenditures of Federal Awards and not be detected and corrected. Because the SEFA was completed incorrectly, and not reconciled to the general ledger, the financial statements were materially misstated prior to the auditor's adjust-ments. Questioned Cost: No Context: Lack of adequate controls over the Schedule of Expenditures of Federal Awards and related accounting re-sulted in the following: SEFA was originally presented for auditors with incorrect information, and not reconciled to the general ledger Repeat of a Prior-Year Finding: No Recommendation: We recommend that the District establish policies and procedures to ensure that all Federal awards are identified and reported accurately on future SEFAs. Internal controls should be designed to prevent, detect, or cor-rect errors in a timely manner by performing periodic reconciliations of the SEFA information to the general ledger throughout the fiscal year. The District should provide appropriate training to staff who are assigned to prepare and re-view the SEFA. District’s Response: The District acknowledges the deficiencies. Corrective Action Plan: The District will establish policies and procedures to ensure that all Federal awards are identi-fied and reported accurately on future SEFAs. Planned Implementation Date: August 1, 2025 Responsible Person: District Business Manager Section IV—Summary Schedule of Prior Audit Findings There were no findings for the fiscal year ended June 30, 2023.
Finding 2024-004 Accounting for Grants, Schedule of Expenditures of Federal Awards, and Fiscal Man-agement (Material Weakness) Assistance Listing Number and Title: 84.041 Impact Aid Name of Federal Agency: U.S. Department of Education Assistance Listing Number and Title: 84.010 Title I Name of Federal Agency: U.S. Department of Education Assistance Listing Number and Title: 10.553 and 10.555 National School Lunch Breakfast and Lunch Name of Federal Agency: U.S. Department of Agriculture Criteria: CFR Part 200.508, CFR Part 200.510, Auditee Responsibilities state that the auditee must prepare the Sched-ule of Expenditures of Federal Awards, which must list individual Federal awards by Federal Agency, including the to-tal Federal awards expended, name of the pass-through entity, CFDA number, and total amount provided to subrecipi-ents. The information contained in the Schedule of Expenditures of Federal Awards should be derived from and relate directly to the underlying accounting and other records used to prepare the financial statements. Condition: The Schedule of Expenditures of Federal Awards (SEFA) was presented for audit with values that were not reconciled with the general ledger, and contained inaccuracies, including: • Overclaimed revenues for Title I • Inability to provide sufficient documentation of Impact Aid revenues and specific Impact Aid program infor-mation • Incorrect reporting of state and federal revenues for National School Lunch Program. Cause: The District does not have effective internal control over the preparation of the Schedule of Expenditures of Federal Awards. The district did not reconcile the expenditures reported on the SEFA with the amounts reported on the district's general ledger. Effect or Potential Effect: Potential understatement or overstatement of expenditures could exist in the Schedule of Expenditures of Federal Awards and not be detected and corrected. Because the SEFA was completed incorrectly, and not reconciled to the general ledger, the financial statements were materially misstated prior to the auditor's adjust-ments. Questioned Cost: No Context: Lack of adequate controls over the Schedule of Expenditures of Federal Awards and related accounting re-sulted in the following: SEFA was originally presented for auditors with incorrect information, and not reconciled to the general ledger Repeat of a Prior-Year Finding: No Recommendation: We recommend that the District establish policies and procedures to ensure that all Federal awards are identified and reported accurately on future SEFAs. Internal controls should be designed to prevent, detect, or cor-rect errors in a timely manner by performing periodic reconciliations of the SEFA information to the general ledger throughout the fiscal year. The District should provide appropriate training to staff who are assigned to prepare and re-view the SEFA. District’s Response: The District acknowledges the deficiencies. Corrective Action Plan: The District will establish policies and procedures to ensure that all Federal awards are identi-fied and reported accurately on future SEFAs. Planned Implementation Date: August 1, 2025 Responsible Person: District Business Manager Section IV—Summary Schedule of Prior Audit Findings There were no findings for the fiscal year ended June 30, 2023.
Finding 2024-004 Accounting for Grants, Schedule of Expenditures of Federal Awards, and Fiscal Man-agement (Material Weakness) Assistance Listing Number and Title: 84.041 Impact Aid Name of Federal Agency: U.S. Department of Education Assistance Listing Number and Title: 84.010 Title I Name of Federal Agency: U.S. Department of Education Assistance Listing Number and Title: 10.553 and 10.555 National School Lunch Breakfast and Lunch Name of Federal Agency: U.S. Department of Agriculture Criteria: CFR Part 200.508, CFR Part 200.510, Auditee Responsibilities state that the auditee must prepare the Sched-ule of Expenditures of Federal Awards, which must list individual Federal awards by Federal Agency, including the to-tal Federal awards expended, name of the pass-through entity, CFDA number, and total amount provided to subrecipi-ents. The information contained in the Schedule of Expenditures of Federal Awards should be derived from and relate directly to the underlying accounting and other records used to prepare the financial statements. Condition: The Schedule of Expenditures of Federal Awards (SEFA) was presented for audit with values that were not reconciled with the general ledger, and contained inaccuracies, including: • Overclaimed revenues for Title I • Inability to provide sufficient documentation of Impact Aid revenues and specific Impact Aid program infor-mation • Incorrect reporting of state and federal revenues for National School Lunch Program. Cause: The District does not have effective internal control over the preparation of the Schedule of Expenditures of Federal Awards. The district did not reconcile the expenditures reported on the SEFA with the amounts reported on the district's general ledger. Effect or Potential Effect: Potential understatement or overstatement of expenditures could exist in the Schedule of Expenditures of Federal Awards and not be detected and corrected. Because the SEFA was completed incorrectly, and not reconciled to the general ledger, the financial statements were materially misstated prior to the auditor's adjust-ments. Questioned Cost: No Context: Lack of adequate controls over the Schedule of Expenditures of Federal Awards and related accounting re-sulted in the following: SEFA was originally presented for auditors with incorrect information, and not reconciled to the general ledger Repeat of a Prior-Year Finding: No Recommendation: We recommend that the District establish policies and procedures to ensure that all Federal awards are identified and reported accurately on future SEFAs. Internal controls should be designed to prevent, detect, or cor-rect errors in a timely manner by performing periodic reconciliations of the SEFA information to the general ledger throughout the fiscal year. The District should provide appropriate training to staff who are assigned to prepare and re-view the SEFA. District’s Response: The District acknowledges the deficiencies. Corrective Action Plan: The District will establish policies and procedures to ensure that all Federal awards are identi-fied and reported accurately on future SEFAs. Planned Implementation Date: August 1, 2025 Responsible Person: District Business Manager Section IV—Summary Schedule of Prior Audit Findings There were no findings for the fiscal year ended June 30, 2023.
Finding 2024-004 Accounting for Grants, Schedule of Expenditures of Federal Awards, and Fiscal Man-agement (Material Weakness) Assistance Listing Number and Title: 84.041 Impact Aid Name of Federal Agency: U.S. Department of Education Assistance Listing Number and Title: 84.010 Title I Name of Federal Agency: U.S. Department of Education Assistance Listing Number and Title: 10.553 and 10.555 National School Lunch Breakfast and Lunch Name of Federal Agency: U.S. Department of Agriculture Criteria: CFR Part 200.508, CFR Part 200.510, Auditee Responsibilities state that the auditee must prepare the Sched-ule of Expenditures of Federal Awards, which must list individual Federal awards by Federal Agency, including the to-tal Federal awards expended, name of the pass-through entity, CFDA number, and total amount provided to subrecipi-ents. The information contained in the Schedule of Expenditures of Federal Awards should be derived from and relate directly to the underlying accounting and other records used to prepare the financial statements. Condition: The Schedule of Expenditures of Federal Awards (SEFA) was presented for audit with values that were not reconciled with the general ledger, and contained inaccuracies, including: • Overclaimed revenues for Title I • Inability to provide sufficient documentation of Impact Aid revenues and specific Impact Aid program infor-mation • Incorrect reporting of state and federal revenues for National School Lunch Program. Cause: The District does not have effective internal control over the preparation of the Schedule of Expenditures of Federal Awards. The district did not reconcile the expenditures reported on the SEFA with the amounts reported on the district's general ledger. Effect or Potential Effect: Potential understatement or overstatement of expenditures could exist in the Schedule of Expenditures of Federal Awards and not be detected and corrected. Because the SEFA was completed incorrectly, and not reconciled to the general ledger, the financial statements were materially misstated prior to the auditor's adjust-ments. Questioned Cost: No Context: Lack of adequate controls over the Schedule of Expenditures of Federal Awards and related accounting re-sulted in the following: SEFA was originally presented for auditors with incorrect information, and not reconciled to the general ledger Repeat of a Prior-Year Finding: No Recommendation: We recommend that the District establish policies and procedures to ensure that all Federal awards are identified and reported accurately on future SEFAs. Internal controls should be designed to prevent, detect, or cor-rect errors in a timely manner by performing periodic reconciliations of the SEFA information to the general ledger throughout the fiscal year. The District should provide appropriate training to staff who are assigned to prepare and re-view the SEFA. District’s Response: The District acknowledges the deficiencies. Corrective Action Plan: The District will establish policies and procedures to ensure that all Federal awards are identi-fied and reported accurately on future SEFAs. Planned Implementation Date: August 1, 2025 Responsible Person: District Business Manager Section IV—Summary Schedule of Prior Audit Findings There were no findings for the fiscal year ended June 30, 2023.
Finding 2024-004 Accounting for Grants, Schedule of Expenditures of Federal Awards, and Fiscal Man-agement (Material Weakness) Assistance Listing Number and Title: 84.041 Impact Aid Name of Federal Agency: U.S. Department of Education Assistance Listing Number and Title: 84.010 Title I Name of Federal Agency: U.S. Department of Education Assistance Listing Number and Title: 10.553 and 10.555 National School Lunch Breakfast and Lunch Name of Federal Agency: U.S. Department of Agriculture Criteria: CFR Part 200.508, CFR Part 200.510, Auditee Responsibilities state that the auditee must prepare the Sched-ule of Expenditures of Federal Awards, which must list individual Federal awards by Federal Agency, including the to-tal Federal awards expended, name of the pass-through entity, CFDA number, and total amount provided to subrecipi-ents. The information contained in the Schedule of Expenditures of Federal Awards should be derived from and relate directly to the underlying accounting and other records used to prepare the financial statements. Condition: The Schedule of Expenditures of Federal Awards (SEFA) was presented for audit with values that were not reconciled with the general ledger, and contained inaccuracies, including: • Overclaimed revenues for Title I • Inability to provide sufficient documentation of Impact Aid revenues and specific Impact Aid program infor-mation • Incorrect reporting of state and federal revenues for National School Lunch Program. Cause: The District does not have effective internal control over the preparation of the Schedule of Expenditures of Federal Awards. The district did not reconcile the expenditures reported on the SEFA with the amounts reported on the district's general ledger. Effect or Potential Effect: Potential understatement or overstatement of expenditures could exist in the Schedule of Expenditures of Federal Awards and not be detected and corrected. Because the SEFA was completed incorrectly, and not reconciled to the general ledger, the financial statements were materially misstated prior to the auditor's adjust-ments. Questioned Cost: No Context: Lack of adequate controls over the Schedule of Expenditures of Federal Awards and related accounting re-sulted in the following: SEFA was originally presented for auditors with incorrect information, and not reconciled to the general ledger Repeat of a Prior-Year Finding: No Recommendation: We recommend that the District establish policies and procedures to ensure that all Federal awards are identified and reported accurately on future SEFAs. Internal controls should be designed to prevent, detect, or cor-rect errors in a timely manner by performing periodic reconciliations of the SEFA information to the general ledger throughout the fiscal year. The District should provide appropriate training to staff who are assigned to prepare and re-view the SEFA. District’s Response: The District acknowledges the deficiencies. Corrective Action Plan: The District will establish policies and procedures to ensure that all Federal awards are identi-fied and reported accurately on future SEFAs. Planned Implementation Date: August 1, 2025 Responsible Person: District Business Manager Section IV—Summary Schedule of Prior Audit Findings There were no findings for the fiscal year ended June 30, 2023.
Finding 2024-004 Accounting for Grants, Schedule of Expenditures of Federal Awards, and Fiscal Man-agement (Material Weakness) Assistance Listing Number and Title: 84.041 Impact Aid Name of Federal Agency: U.S. Department of Education Assistance Listing Number and Title: 84.010 Title I Name of Federal Agency: U.S. Department of Education Assistance Listing Number and Title: 10.553 and 10.555 National School Lunch Breakfast and Lunch Name of Federal Agency: U.S. Department of Agriculture Criteria: CFR Part 200.508, CFR Part 200.510, Auditee Responsibilities state that the auditee must prepare the Sched-ule of Expenditures of Federal Awards, which must list individual Federal awards by Federal Agency, including the to-tal Federal awards expended, name of the pass-through entity, CFDA number, and total amount provided to subrecipi-ents. The information contained in the Schedule of Expenditures of Federal Awards should be derived from and relate directly to the underlying accounting and other records used to prepare the financial statements. Condition: The Schedule of Expenditures of Federal Awards (SEFA) was presented for audit with values that were not reconciled with the general ledger, and contained inaccuracies, including: • Overclaimed revenues for Title I • Inability to provide sufficient documentation of Impact Aid revenues and specific Impact Aid program infor-mation • Incorrect reporting of state and federal revenues for National School Lunch Program. Cause: The District does not have effective internal control over the preparation of the Schedule of Expenditures of Federal Awards. The district did not reconcile the expenditures reported on the SEFA with the amounts reported on the district's general ledger. Effect or Potential Effect: Potential understatement or overstatement of expenditures could exist in the Schedule of Expenditures of Federal Awards and not be detected and corrected. Because the SEFA was completed incorrectly, and not reconciled to the general ledger, the financial statements were materially misstated prior to the auditor's adjust-ments. Questioned Cost: No Context: Lack of adequate controls over the Schedule of Expenditures of Federal Awards and related accounting re-sulted in the following: SEFA was originally presented for auditors with incorrect information, and not reconciled to the general ledger Repeat of a Prior-Year Finding: No Recommendation: We recommend that the District establish policies and procedures to ensure that all Federal awards are identified and reported accurately on future SEFAs. Internal controls should be designed to prevent, detect, or cor-rect errors in a timely manner by performing periodic reconciliations of the SEFA information to the general ledger throughout the fiscal year. The District should provide appropriate training to staff who are assigned to prepare and re-view the SEFA. District’s Response: The District acknowledges the deficiencies. Corrective Action Plan: The District will establish policies and procedures to ensure that all Federal awards are identi-fied and reported accurately on future SEFAs. Planned Implementation Date: August 1, 2025 Responsible Person: District Business Manager Section IV—Summary Schedule of Prior Audit Findings There were no findings for the fiscal year ended June 30, 2023.
Finding 2024-003 – Preparation of Schedule of Expenditures of Federal Awards (SEFA) (Material Weakness) (Repeat Finding) Program: All Assistance Listing (AL) No.: N/A Federal Agency: N/A Passed Through: N/A Award Year: Fiscal Year 2023-2024 Compliance Requirement: N/A Questioned Costs: None 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 Agency) must prepare a SEFA for the period covered by the auditee’s financial statements, which must include the total federal awards expended as determined in accordance with §200.502. In addition, §200.303 of the Uniform Guidance states that the Agency must establish and maintain effective internal control over the federal awards, including controls over the accuracy of program information and expenditure amounts. Condition During audit procedures performed over the SEFA, we noted that the Agency incorrectly included Federal expenditures from AL No. 20.507 and AL No. 20.509 that were accrued and recorded in fiscal year 2023 in the amount of $2,160,408, and excluded expenditures from AL No. 20.507 Federal Transit Formula Grants in the amount of $2,924,012 and 20.509 Formula Grants for Rural Areas and Tribal Transit Program in the amount of $2,259,151 on its preliminary SEFA. Cause of Condition The Agency’s existing internal control system is not designed to provide an accurate and complete SEFA. The procedures currently in place did not include sufficient review of the information and supporting documentation relating to federal awards before the SEFA was provided to the external auditors. The first version of the SEFA provided by the Agency reported total expenditures of $2,842,283; the final revised expenditures totaled $5,865,038. Effect of Condition The SEFA, which is prepared by the Agency and considered supplementary information to the financial statements, is a key part of the reporting package required by the Uniform Guidance. The SEFA also serves as the primary basis that the external auditors use to determine which programs will be audited as part of the single audit; therefore, the Agency’s responsibility for preparing an accurate and complete SEFA is critical. The inability to properly identify and track federal expenditures in the SEFA increases the likelihood that federal expenditures would not be fairly reported. There is increased risk of noncompliance with the requirements set forth in the U.S. Office of Management and Budget (OMB) Compliance Supplement, which can jeopardize future federal funding as well as result in the payback of federal awards. Recommendation We recommend the Agency implement internal controls to ensure the accuracy of program information, expenditure amounts, and assistance listing numbers. We also recommend the Agency strengthen its year-end closing procedures to ensure that all transactions and federal awards related to the fiscal year are properly captured and recorded in the general ledger to ensure the accuracy and completeness of the financial statements and supplementary schedules. Additionally, we recommend that the Agency provide sufficient resources and adequate oversight within the Agency to oversee the year-end closing procedures and preparation of the financial statements and supporting schedules. Lastly, we recommend the Agency provide training on an as needed basis for employees with financial reporting responsibilities. Management Response and Corrective Action Plan We acknowledge the findings regarding the preparation of the Schedule of Expenditures of Federal Awards (SEFA). Management agrees that there were errors in the classification and reporting of federal expenditures during the fiscal year 2023-2024, which resulted from inadequate review controls and documentation procedures. The Agency is committed to enhancing internal controls and year-end closing processes to ensure that the SEFA is complete, accurate, and compliant with 2 CFR Part 200 requirements.
Finding 2024-003 – Preparation of Schedule of Expenditures of Federal Awards (SEFA) (Material Weakness) (Repeat Finding) Program: All Assistance Listing (AL) No.: N/A Federal Agency: N/A Passed Through: N/A Award Year: Fiscal Year 2023-2024 Compliance Requirement: N/A Questioned Costs: None 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 Agency) must prepare a SEFA for the period covered by the auditee’s financial statements, which must include the total federal awards expended as determined in accordance with §200.502. In addition, §200.303 of the Uniform Guidance states that the Agency must establish and maintain effective internal control over the federal awards, including controls over the accuracy of program information and expenditure amounts. Condition During audit procedures performed over the SEFA, we noted that the Agency incorrectly included Federal expenditures from AL No. 20.507 and AL No. 20.509 that were accrued and recorded in fiscal year 2023 in the amount of $2,160,408, and excluded expenditures from AL No. 20.507 Federal Transit Formula Grants in the amount of $2,924,012 and 20.509 Formula Grants for Rural Areas and Tribal Transit Program in the amount of $2,259,151 on its preliminary SEFA. Cause of Condition The Agency’s existing internal control system is not designed to provide an accurate and complete SEFA. The procedures currently in place did not include sufficient review of the information and supporting documentation relating to federal awards before the SEFA was provided to the external auditors. The first version of the SEFA provided by the Agency reported total expenditures of $2,842,283; the final revised expenditures totaled $5,865,038. Effect of Condition The SEFA, which is prepared by the Agency and considered supplementary information to the financial statements, is a key part of the reporting package required by the Uniform Guidance. The SEFA also serves as the primary basis that the external auditors use to determine which programs will be audited as part of the single audit; therefore, the Agency’s responsibility for preparing an accurate and complete SEFA is critical. The inability to properly identify and track federal expenditures in the SEFA increases the likelihood that federal expenditures would not be fairly reported. There is increased risk of noncompliance with the requirements set forth in the U.S. Office of Management and Budget (OMB) Compliance Supplement, which can jeopardize future federal funding as well as result in the payback of federal awards. Recommendation We recommend the Agency implement internal controls to ensure the accuracy of program information, expenditure amounts, and assistance listing numbers. We also recommend the Agency strengthen its year-end closing procedures to ensure that all transactions and federal awards related to the fiscal year are properly captured and recorded in the general ledger to ensure the accuracy and completeness of the financial statements and supplementary schedules. Additionally, we recommend that the Agency provide sufficient resources and adequate oversight within the Agency to oversee the year-end closing procedures and preparation of the financial statements and supporting schedules. Lastly, we recommend the Agency provide training on an as needed basis for employees with financial reporting responsibilities. Management Response and Corrective Action Plan We acknowledge the findings regarding the preparation of the Schedule of Expenditures of Federal Awards (SEFA). Management agrees that there were errors in the classification and reporting of federal expenditures during the fiscal year 2023-2024, which resulted from inadequate review controls and documentation procedures. The Agency is committed to enhancing internal controls and year-end closing processes to ensure that the SEFA is complete, accurate, and compliant with 2 CFR Part 200 requirements.
Finding 2024-003 – Preparation of Schedule of Expenditures of Federal Awards (SEFA) (Material Weakness) (Repeat Finding) Program: All Assistance Listing (AL) No.: N/A Federal Agency: N/A Passed Through: N/A Award Year: Fiscal Year 2023-2024 Compliance Requirement: N/A Questioned Costs: None 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 Agency) must prepare a SEFA for the period covered by the auditee’s financial statements, which must include the total federal awards expended as determined in accordance with §200.502. In addition, §200.303 of the Uniform Guidance states that the Agency must establish and maintain effective internal control over the federal awards, including controls over the accuracy of program information and expenditure amounts. Condition During audit procedures performed over the SEFA, we noted that the Agency incorrectly included Federal expenditures from AL No. 20.507 and AL No. 20.509 that were accrued and recorded in fiscal year 2023 in the amount of $2,160,408, and excluded expenditures from AL No. 20.507 Federal Transit Formula Grants in the amount of $2,924,012 and 20.509 Formula Grants for Rural Areas and Tribal Transit Program in the amount of $2,259,151 on its preliminary SEFA. Cause of Condition The Agency’s existing internal control system is not designed to provide an accurate and complete SEFA. The procedures currently in place did not include sufficient review of the information and supporting documentation relating to federal awards before the SEFA was provided to the external auditors. The first version of the SEFA provided by the Agency reported total expenditures of $2,842,283; the final revised expenditures totaled $5,865,038. Effect of Condition The SEFA, which is prepared by the Agency and considered supplementary information to the financial statements, is a key part of the reporting package required by the Uniform Guidance. The SEFA also serves as the primary basis that the external auditors use to determine which programs will be audited as part of the single audit; therefore, the Agency’s responsibility for preparing an accurate and complete SEFA is critical. The inability to properly identify and track federal expenditures in the SEFA increases the likelihood that federal expenditures would not be fairly reported. There is increased risk of noncompliance with the requirements set forth in the U.S. Office of Management and Budget (OMB) Compliance Supplement, which can jeopardize future federal funding as well as result in the payback of federal awards. Recommendation We recommend the Agency implement internal controls to ensure the accuracy of program information, expenditure amounts, and assistance listing numbers. We also recommend the Agency strengthen its year-end closing procedures to ensure that all transactions and federal awards related to the fiscal year are properly captured and recorded in the general ledger to ensure the accuracy and completeness of the financial statements and supplementary schedules. Additionally, we recommend that the Agency provide sufficient resources and adequate oversight within the Agency to oversee the year-end closing procedures and preparation of the financial statements and supporting schedules. Lastly, we recommend the Agency provide training on an as needed basis for employees with financial reporting responsibilities. Management Response and Corrective Action Plan We acknowledge the findings regarding the preparation of the Schedule of Expenditures of Federal Awards (SEFA). Management agrees that there were errors in the classification and reporting of federal expenditures during the fiscal year 2023-2024, which resulted from inadequate review controls and documentation procedures. The Agency is committed to enhancing internal controls and year-end closing processes to ensure that the SEFA is complete, accurate, and compliant with 2 CFR Part 200 requirements.
Finding 2024-003 – Preparation of Schedule of Expenditures of Federal Awards (SEFA) (Material Weakness) (Repeat Finding) Program: All Assistance Listing (AL) No.: N/A Federal Agency: N/A Passed Through: N/A Award Year: Fiscal Year 2023-2024 Compliance Requirement: N/A Questioned Costs: None 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 Agency) must prepare a SEFA for the period covered by the auditee’s financial statements, which must include the total federal awards expended as determined in accordance with §200.502. In addition, §200.303 of the Uniform Guidance states that the Agency must establish and maintain effective internal control over the federal awards, including controls over the accuracy of program information and expenditure amounts. Condition During audit procedures performed over the SEFA, we noted that the Agency incorrectly included Federal expenditures from AL No. 20.507 and AL No. 20.509 that were accrued and recorded in fiscal year 2023 in the amount of $2,160,408, and excluded expenditures from AL No. 20.507 Federal Transit Formula Grants in the amount of $2,924,012 and 20.509 Formula Grants for Rural Areas and Tribal Transit Program in the amount of $2,259,151 on its preliminary SEFA. Cause of Condition The Agency’s existing internal control system is not designed to provide an accurate and complete SEFA. The procedures currently in place did not include sufficient review of the information and supporting documentation relating to federal awards before the SEFA was provided to the external auditors. The first version of the SEFA provided by the Agency reported total expenditures of $2,842,283; the final revised expenditures totaled $5,865,038. Effect of Condition The SEFA, which is prepared by the Agency and considered supplementary information to the financial statements, is a key part of the reporting package required by the Uniform Guidance. The SEFA also serves as the primary basis that the external auditors use to determine which programs will be audited as part of the single audit; therefore, the Agency’s responsibility for preparing an accurate and complete SEFA is critical. The inability to properly identify and track federal expenditures in the SEFA increases the likelihood that federal expenditures would not be fairly reported. There is increased risk of noncompliance with the requirements set forth in the U.S. Office of Management and Budget (OMB) Compliance Supplement, which can jeopardize future federal funding as well as result in the payback of federal awards. Recommendation We recommend the Agency implement internal controls to ensure the accuracy of program information, expenditure amounts, and assistance listing numbers. We also recommend the Agency strengthen its year-end closing procedures to ensure that all transactions and federal awards related to the fiscal year are properly captured and recorded in the general ledger to ensure the accuracy and completeness of the financial statements and supplementary schedules. Additionally, we recommend that the Agency provide sufficient resources and adequate oversight within the Agency to oversee the year-end closing procedures and preparation of the financial statements and supporting schedules. Lastly, we recommend the Agency provide training on an as needed basis for employees with financial reporting responsibilities. Management Response and Corrective Action Plan We acknowledge the findings regarding the preparation of the Schedule of Expenditures of Federal Awards (SEFA). Management agrees that there were errors in the classification and reporting of federal expenditures during the fiscal year 2023-2024, which resulted from inadequate review controls and documentation procedures. The Agency is committed to enhancing internal controls and year-end closing processes to ensure that the SEFA is complete, accurate, and compliant with 2 CFR Part 200 requirements.
Finding 2024-003 – Preparation of Schedule of Expenditures of Federal Awards (SEFA) (Material Weakness) (Repeat Finding) Program: All Assistance Listing (AL) No.: N/A Federal Agency: N/A Passed Through: N/A Award Year: Fiscal Year 2023-2024 Compliance Requirement: N/A Questioned Costs: None 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 Agency) must prepare a SEFA for the period covered by the auditee’s financial statements, which must include the total federal awards expended as determined in accordance with §200.502. In addition, §200.303 of the Uniform Guidance states that the Agency must establish and maintain effective internal control over the federal awards, including controls over the accuracy of program information and expenditure amounts. Condition During audit procedures performed over the SEFA, we noted that the Agency incorrectly included Federal expenditures from AL No. 20.507 and AL No. 20.509 that were accrued and recorded in fiscal year 2023 in the amount of $2,160,408, and excluded expenditures from AL No. 20.507 Federal Transit Formula Grants in the amount of $2,924,012 and 20.509 Formula Grants for Rural Areas and Tribal Transit Program in the amount of $2,259,151 on its preliminary SEFA. Cause of Condition The Agency’s existing internal control system is not designed to provide an accurate and complete SEFA. The procedures currently in place did not include sufficient review of the information and supporting documentation relating to federal awards before the SEFA was provided to the external auditors. The first version of the SEFA provided by the Agency reported total expenditures of $2,842,283; the final revised expenditures totaled $5,865,038. Effect of Condition The SEFA, which is prepared by the Agency and considered supplementary information to the financial statements, is a key part of the reporting package required by the Uniform Guidance. The SEFA also serves as the primary basis that the external auditors use to determine which programs will be audited as part of the single audit; therefore, the Agency’s responsibility for preparing an accurate and complete SEFA is critical. The inability to properly identify and track federal expenditures in the SEFA increases the likelihood that federal expenditures would not be fairly reported. There is increased risk of noncompliance with the requirements set forth in the U.S. Office of Management and Budget (OMB) Compliance Supplement, which can jeopardize future federal funding as well as result in the payback of federal awards. Recommendation We recommend the Agency implement internal controls to ensure the accuracy of program information, expenditure amounts, and assistance listing numbers. We also recommend the Agency strengthen its year-end closing procedures to ensure that all transactions and federal awards related to the fiscal year are properly captured and recorded in the general ledger to ensure the accuracy and completeness of the financial statements and supplementary schedules. Additionally, we recommend that the Agency provide sufficient resources and adequate oversight within the Agency to oversee the year-end closing procedures and preparation of the financial statements and supporting schedules. Lastly, we recommend the Agency provide training on an as needed basis for employees with financial reporting responsibilities. Management Response and Corrective Action Plan We acknowledge the findings regarding the preparation of the Schedule of Expenditures of Federal Awards (SEFA). Management agrees that there were errors in the classification and reporting of federal expenditures during the fiscal year 2023-2024, which resulted from inadequate review controls and documentation procedures. The Agency is committed to enhancing internal controls and year-end closing processes to ensure that the SEFA is complete, accurate, and compliant with 2 CFR Part 200 requirements.
2024-004 Improve Internal Controls Over the Preparation of the Schedule of Expenditures of Federal Awards (SEFA) Federal Program(s) Information Federal Agency: Department of Transportation Award Name: National Infrastructure Investments Assistance Listing Number: 20.933 Award Year: 2024 Federal Agency: Environmental Protection Agency Award Name: Clean Water State Revolving Fund Assistance Listing Number: 66.458 Award Year: 2024 Federal Agency: Department of Housing and Urban Development Award Name: Lead Hazard Reduction Demonstration Grant Assistance Listing Number: 14.905 Award Year: 2024 Type of Finding Compliance Internal Control Over Compliance – Material Weakness SECTION III - FEDERAL AWARD FINDINGS AND QUESTIONED COSTS (CONTINUED) Criteria or Specific Requirement Per 2 CFR 200.510(b), auditees must prepare a complete and accurate Schedule of Expenditures of Federal Awards (SEFA) for the period covered by the auditee’s financial statements. The SEFA must accurately and completely report federal awards expended during the period, regardless of when reimbursements are received. The SEFA should reflect federal expenditures as incurred in accordance with program requirements and generally accepted accounting principles. Condition and Context While preparing its draft SEFA, the City did not include $1,183,881 in federal expenditures under the National Infrastructure Investment grant. In addition, expenditures reported under the Clean Water State Revolving Fund grant were understated by $30,921 and expenditures reported under the Lead Hazard Reduction Demonstration Grant Program were overstated by $391,414. As a result, an adjustment was required in order for the SEFA to be complete and accurate. Cause The City did not have adequate controls in place in order to ensure the complete and accurate preparation of the SEFA, including reconciling federal expenditures reported in the general ledger with the information included on the SEFA. Certain programs within the City reported expenditures on the SEFA based on when federal reimbursements were received, rather than when expenditures were incurred. Expenditures under the Lead Hazard Reduction Demonstration Grant initially included CDBG funds and the match that was not to be reported under the program on the SEFA. The misapplication of the reporting basis led to misstatement and omission of federal expenditures. Effect or Potential Effect Incomplete and inaccurate SEFA reporting increases the risk that federal agencies and oversight bodies receive misleading financial information. It may also result in improper determination of major programs for audit testing and affect audit risk assessments. Reporting federal expenditures by reimbursement rather than when incurred is not compliant with federal requirements and generally accepted accounting principles. No questioned costs are reported as the finding relates to completeness and accuracy of reporting, not the allowability of costs. Recommendation The City should strengthen its procedures and controls for preparing the SEFA to ensure all federal awards expended during the period are included and accurately reported based on expenditures incurred, not reimbursements received. The City should ensure that adequate procedures and controls are in place to ensure that the SEFA is complete and accurate. These controls should include controls requiring the reconciliation of federal expenditures to the appropriate supporting documentation (e.g., general ledger, grant reports, etc.). SECTION III - FEDERAL AWARD FINDINGS AND QUESTIONED COSTS (CONTINUED) Views of Responsible Official Management’s corrective action plan is included at the end of this report after the Schedule of Prior Year Findings.
2024-004 Improve Internal Controls Over the Preparation of the Schedule of Expenditures of Federal Awards (SEFA) Federal Program(s) Information Federal Agency: Department of Transportation Award Name: National Infrastructure Investments Assistance Listing Number: 20.933 Award Year: 2024 Federal Agency: Environmental Protection Agency Award Name: Clean Water State Revolving Fund Assistance Listing Number: 66.458 Award Year: 2024 Federal Agency: Department of Housing and Urban Development Award Name: Lead Hazard Reduction Demonstration Grant Assistance Listing Number: 14.905 Award Year: 2024 Type of Finding Compliance Internal Control Over Compliance – Material Weakness SECTION III - FEDERAL AWARD FINDINGS AND QUESTIONED COSTS (CONTINUED) Criteria or Specific Requirement Per 2 CFR 200.510(b), auditees must prepare a complete and accurate Schedule of Expenditures of Federal Awards (SEFA) for the period covered by the auditee’s financial statements. The SEFA must accurately and completely report federal awards expended during the period, regardless of when reimbursements are received. The SEFA should reflect federal expenditures as incurred in accordance with program requirements and generally accepted accounting principles. Condition and Context While preparing its draft SEFA, the City did not include $1,183,881 in federal expenditures under the National Infrastructure Investment grant. In addition, expenditures reported under the Clean Water State Revolving Fund grant were understated by $30,921 and expenditures reported under the Lead Hazard Reduction Demonstration Grant Program were overstated by $391,414. As a result, an adjustment was required in order for the SEFA to be complete and accurate. Cause The City did not have adequate controls in place in order to ensure the complete and accurate preparation of the SEFA, including reconciling federal expenditures reported in the general ledger with the information included on the SEFA. Certain programs within the City reported expenditures on the SEFA based on when federal reimbursements were received, rather than when expenditures were incurred. Expenditures under the Lead Hazard Reduction Demonstration Grant initially included CDBG funds and the match that was not to be reported under the program on the SEFA. The misapplication of the reporting basis led to misstatement and omission of federal expenditures. Effect or Potential Effect Incomplete and inaccurate SEFA reporting increases the risk that federal agencies and oversight bodies receive misleading financial information. It may also result in improper determination of major programs for audit testing and affect audit risk assessments. Reporting federal expenditures by reimbursement rather than when incurred is not compliant with federal requirements and generally accepted accounting principles. No questioned costs are reported as the finding relates to completeness and accuracy of reporting, not the allowability of costs. Recommendation The City should strengthen its procedures and controls for preparing the SEFA to ensure all federal awards expended during the period are included and accurately reported based on expenditures incurred, not reimbursements received. The City should ensure that adequate procedures and controls are in place to ensure that the SEFA is complete and accurate. These controls should include controls requiring the reconciliation of federal expenditures to the appropriate supporting documentation (e.g., general ledger, grant reports, etc.). SECTION III - FEDERAL AWARD FINDINGS AND QUESTIONED COSTS (CONTINUED) Views of Responsible Official Management’s corrective action plan is included at the end of this report after the Schedule of Prior Year Findings.
2024-004 Improve Internal Controls Over the Preparation of the Schedule of Expenditures of Federal Awards (SEFA) Federal Program(s) Information Federal Agency: Department of Transportation Award Name: National Infrastructure Investments Assistance Listing Number: 20.933 Award Year: 2024 Federal Agency: Environmental Protection Agency Award Name: Clean Water State Revolving Fund Assistance Listing Number: 66.458 Award Year: 2024 Federal Agency: Department of Housing and Urban Development Award Name: Lead Hazard Reduction Demonstration Grant Assistance Listing Number: 14.905 Award Year: 2024 Type of Finding Compliance Internal Control Over Compliance – Material Weakness SECTION III - FEDERAL AWARD FINDINGS AND QUESTIONED COSTS (CONTINUED) Criteria or Specific Requirement Per 2 CFR 200.510(b), auditees must prepare a complete and accurate Schedule of Expenditures of Federal Awards (SEFA) for the period covered by the auditee’s financial statements. The SEFA must accurately and completely report federal awards expended during the period, regardless of when reimbursements are received. The SEFA should reflect federal expenditures as incurred in accordance with program requirements and generally accepted accounting principles. Condition and Context While preparing its draft SEFA, the City did not include $1,183,881 in federal expenditures under the National Infrastructure Investment grant. In addition, expenditures reported under the Clean Water State Revolving Fund grant were understated by $30,921 and expenditures reported under the Lead Hazard Reduction Demonstration Grant Program were overstated by $391,414. As a result, an adjustment was required in order for the SEFA to be complete and accurate. Cause The City did not have adequate controls in place in order to ensure the complete and accurate preparation of the SEFA, including reconciling federal expenditures reported in the general ledger with the information included on the SEFA. Certain programs within the City reported expenditures on the SEFA based on when federal reimbursements were received, rather than when expenditures were incurred. Expenditures under the Lead Hazard Reduction Demonstration Grant initially included CDBG funds and the match that was not to be reported under the program on the SEFA. The misapplication of the reporting basis led to misstatement and omission of federal expenditures. Effect or Potential Effect Incomplete and inaccurate SEFA reporting increases the risk that federal agencies and oversight bodies receive misleading financial information. It may also result in improper determination of major programs for audit testing and affect audit risk assessments. Reporting federal expenditures by reimbursement rather than when incurred is not compliant with federal requirements and generally accepted accounting principles. No questioned costs are reported as the finding relates to completeness and accuracy of reporting, not the allowability of costs. Recommendation The City should strengthen its procedures and controls for preparing the SEFA to ensure all federal awards expended during the period are included and accurately reported based on expenditures incurred, not reimbursements received. The City should ensure that adequate procedures and controls are in place to ensure that the SEFA is complete and accurate. These controls should include controls requiring the reconciliation of federal expenditures to the appropriate supporting documentation (e.g., general ledger, grant reports, etc.). SECTION III - FEDERAL AWARD FINDINGS AND QUESTIONED COSTS (CONTINUED) Views of Responsible Official Management’s corrective action plan is included at the end of this report after the Schedule of Prior Year Findings.
2024-004 Improve Internal Controls Over the Preparation of the Schedule of Expenditures of Federal Awards (SEFA) Federal Program(s) Information Federal Agency: Department of Transportation Award Name: National Infrastructure Investments Assistance Listing Number: 20.933 Award Year: 2024 Federal Agency: Environmental Protection Agency Award Name: Clean Water State Revolving Fund Assistance Listing Number: 66.458 Award Year: 2024 Federal Agency: Department of Housing and Urban Development Award Name: Lead Hazard Reduction Demonstration Grant Assistance Listing Number: 14.905 Award Year: 2024 Type of Finding Compliance Internal Control Over Compliance – Material Weakness SECTION III - FEDERAL AWARD FINDINGS AND QUESTIONED COSTS (CONTINUED) Criteria or Specific Requirement Per 2 CFR 200.510(b), auditees must prepare a complete and accurate Schedule of Expenditures of Federal Awards (SEFA) for the period covered by the auditee’s financial statements. The SEFA must accurately and completely report federal awards expended during the period, regardless of when reimbursements are received. The SEFA should reflect federal expenditures as incurred in accordance with program requirements and generally accepted accounting principles. Condition and Context While preparing its draft SEFA, the City did not include $1,183,881 in federal expenditures under the National Infrastructure Investment grant. In addition, expenditures reported under the Clean Water State Revolving Fund grant were understated by $30,921 and expenditures reported under the Lead Hazard Reduction Demonstration Grant Program were overstated by $391,414. As a result, an adjustment was required in order for the SEFA to be complete and accurate. Cause The City did not have adequate controls in place in order to ensure the complete and accurate preparation of the SEFA, including reconciling federal expenditures reported in the general ledger with the information included on the SEFA. Certain programs within the City reported expenditures on the SEFA based on when federal reimbursements were received, rather than when expenditures were incurred. Expenditures under the Lead Hazard Reduction Demonstration Grant initially included CDBG funds and the match that was not to be reported under the program on the SEFA. The misapplication of the reporting basis led to misstatement and omission of federal expenditures. Effect or Potential Effect Incomplete and inaccurate SEFA reporting increases the risk that federal agencies and oversight bodies receive misleading financial information. It may also result in improper determination of major programs for audit testing and affect audit risk assessments. Reporting federal expenditures by reimbursement rather than when incurred is not compliant with federal requirements and generally accepted accounting principles. No questioned costs are reported as the finding relates to completeness and accuracy of reporting, not the allowability of costs. Recommendation The City should strengthen its procedures and controls for preparing the SEFA to ensure all federal awards expended during the period are included and accurately reported based on expenditures incurred, not reimbursements received. The City should ensure that adequate procedures and controls are in place to ensure that the SEFA is complete and accurate. These controls should include controls requiring the reconciliation of federal expenditures to the appropriate supporting documentation (e.g., general ledger, grant reports, etc.). SECTION III - FEDERAL AWARD FINDINGS AND QUESTIONED COSTS (CONTINUED) Views of Responsible Official Management’s corrective action plan is included at the end of this report after the Schedule of Prior Year Findings.
2024-004 Improve Internal Controls Over the Preparation of the Schedule of Expenditures of Federal Awards (SEFA) Federal Program(s) Information Federal Agency: Department of Transportation Award Name: National Infrastructure Investments Assistance Listing Number: 20.933 Award Year: 2024 Federal Agency: Environmental Protection Agency Award Name: Clean Water State Revolving Fund Assistance Listing Number: 66.458 Award Year: 2024 Federal Agency: Department of Housing and Urban Development Award Name: Lead Hazard Reduction Demonstration Grant Assistance Listing Number: 14.905 Award Year: 2024 Type of Finding Compliance Internal Control Over Compliance – Material Weakness SECTION III - FEDERAL AWARD FINDINGS AND QUESTIONED COSTS (CONTINUED) Criteria or Specific Requirement Per 2 CFR 200.510(b), auditees must prepare a complete and accurate Schedule of Expenditures of Federal Awards (SEFA) for the period covered by the auditee’s financial statements. The SEFA must accurately and completely report federal awards expended during the period, regardless of when reimbursements are received. The SEFA should reflect federal expenditures as incurred in accordance with program requirements and generally accepted accounting principles. Condition and Context While preparing its draft SEFA, the City did not include $1,183,881 in federal expenditures under the National Infrastructure Investment grant. In addition, expenditures reported under the Clean Water State Revolving Fund grant were understated by $30,921 and expenditures reported under the Lead Hazard Reduction Demonstration Grant Program were overstated by $391,414. As a result, an adjustment was required in order for the SEFA to be complete and accurate. Cause The City did not have adequate controls in place in order to ensure the complete and accurate preparation of the SEFA, including reconciling federal expenditures reported in the general ledger with the information included on the SEFA. Certain programs within the City reported expenditures on the SEFA based on when federal reimbursements were received, rather than when expenditures were incurred. Expenditures under the Lead Hazard Reduction Demonstration Grant initially included CDBG funds and the match that was not to be reported under the program on the SEFA. The misapplication of the reporting basis led to misstatement and omission of federal expenditures. Effect or Potential Effect Incomplete and inaccurate SEFA reporting increases the risk that federal agencies and oversight bodies receive misleading financial information. It may also result in improper determination of major programs for audit testing and affect audit risk assessments. Reporting federal expenditures by reimbursement rather than when incurred is not compliant with federal requirements and generally accepted accounting principles. No questioned costs are reported as the finding relates to completeness and accuracy of reporting, not the allowability of costs. Recommendation The City should strengthen its procedures and controls for preparing the SEFA to ensure all federal awards expended during the period are included and accurately reported based on expenditures incurred, not reimbursements received. The City should ensure that adequate procedures and controls are in place to ensure that the SEFA is complete and accurate. These controls should include controls requiring the reconciliation of federal expenditures to the appropriate supporting documentation (e.g., general ledger, grant reports, etc.). SECTION III - FEDERAL AWARD FINDINGS AND QUESTIONED COSTS (CONTINUED) Views of Responsible Official Management’s corrective action plan is included at the end of this report after the Schedule of Prior Year Findings.
Finding 2024-001: Preparation of the Schedule of Expenditures of Federal Awards Material weakness/other matter noncompliance Identification of federal programs: • ALN 98.001: USAID Foreign Assistance for Programs Overseas awarded by the U.S Agency for International Development, specifically contract 72061522CA00003 for fiscal year 2024. • ALN 19.705: Trans-National Crime awarded by the U.S. Department of State Bureau of International Narcotics and Law Enforcement Affairs, specifically contract SINLEC21GR3379, and the indirect award passed though the Humane Society of the United States for fiscal year 2024. Criteria: The Uniform Guidance (2 CFR 200.510b) requires that the auditee (typically a non-federal entity receiving federal funds) must prepare a Schedule of Expenditures of Federal Awards for the period covered by its financial statements which must include the total Federal Awards expended as determined in accordance with 2 CFR 200.502. Condition: The Schedule of Expenditures of Federal Awards for the year ended June 30, 2024 improperly excluded the awards provided to sub-recipients from the total expenditures reported for the federal awards for ALN 98.001 USAID Foreign Assistance for Programs Overseas and ALN 19.705 Trans-National Crime. Cause: There was an error in the formula that linked the supporting schedule to the schedule of expenditures of federal awards. Effect: Not in compliance with the Uniform Guidance (2 CFR 200.510b). There could be impacts on future funding. Questioned costs: None. Context: Total federal awards for ALN 98.001 USAID Foreign Assistance for Programs Overseas improperly excluded subrecipient awards from the total in the amount of $143,937. Total federal awards for ALN 19.705 Trans-National Crime improperly excluded subrecipient awards from the total in the amount of $166,877. Repeat Finding: No Recommendation: We recommend that the Organization review the schedule of expenditures of federal awards prior to issuance. Views of responsible officials and planned corrective actions: Management agrees with the finding. See corrective action plan.
Finding 2024-001: Preparation of the Schedule of Expenditures of Federal Awards Material weakness/other matter noncompliance Identification of federal programs: • ALN 98.001: USAID Foreign Assistance for Programs Overseas awarded by the U.S Agency for International Development, specifically contract 72061522CA00003 for fiscal year 2024. • ALN 19.705: Trans-National Crime awarded by the U.S. Department of State Bureau of International Narcotics and Law Enforcement Affairs, specifically contract SINLEC21GR3379, and the indirect award passed though the Humane Society of the United States for fiscal year 2024. Criteria: The Uniform Guidance (2 CFR 200.510b) requires that the auditee (typically a non-federal entity receiving federal funds) must prepare a Schedule of Expenditures of Federal Awards for the period covered by its financial statements which must include the total Federal Awards expended as determined in accordance with 2 CFR 200.502. Condition: The Schedule of Expenditures of Federal Awards for the year ended June 30, 2024 improperly excluded the awards provided to sub-recipients from the total expenditures reported for the federal awards for ALN 98.001 USAID Foreign Assistance for Programs Overseas and ALN 19.705 Trans-National Crime. Cause: There was an error in the formula that linked the supporting schedule to the schedule of expenditures of federal awards. Effect: Not in compliance with the Uniform Guidance (2 CFR 200.510b). There could be impacts on future funding. Questioned costs: None. Context: Total federal awards for ALN 98.001 USAID Foreign Assistance for Programs Overseas improperly excluded subrecipient awards from the total in the amount of $143,937. Total federal awards for ALN 19.705 Trans-National Crime improperly excluded subrecipient awards from the total in the amount of $166,877. Repeat Finding: No Recommendation: We recommend that the Organization review the schedule of expenditures of federal awards prior to issuance. Views of responsible officials and planned corrective actions: Management agrees with the finding. See corrective action plan.
Finding 2024-001: Preparation of the Schedule of Expenditures of Federal Awards Material weakness/other matter noncompliance Identification of federal programs: • ALN 98.001: USAID Foreign Assistance for Programs Overseas awarded by the U.S Agency for International Development, specifically contract 72061522CA00003 for fiscal year 2024. • ALN 19.705: Trans-National Crime awarded by the U.S. Department of State Bureau of International Narcotics and Law Enforcement Affairs, specifically contract SINLEC21GR3379, and the indirect award passed though the Humane Society of the United States for fiscal year 2024. Criteria: The Uniform Guidance (2 CFR 200.510b) requires that the auditee (typically a non-federal entity receiving federal funds) must prepare a Schedule of Expenditures of Federal Awards for the period covered by its financial statements which must include the total Federal Awards expended as determined in accordance with 2 CFR 200.502. Condition: The Schedule of Expenditures of Federal Awards for the year ended June 30, 2024 improperly excluded the awards provided to sub-recipients from the total expenditures reported for the federal awards for ALN 98.001 USAID Foreign Assistance for Programs Overseas and ALN 19.705 Trans-National Crime. Cause: There was an error in the formula that linked the supporting schedule to the schedule of expenditures of federal awards. Effect: Not in compliance with the Uniform Guidance (2 CFR 200.510b). There could be impacts on future funding. Questioned costs: None. Context: Total federal awards for ALN 98.001 USAID Foreign Assistance for Programs Overseas improperly excluded subrecipient awards from the total in the amount of $143,937. Total federal awards for ALN 19.705 Trans-National Crime improperly excluded subrecipient awards from the total in the amount of $166,877. Repeat Finding: No Recommendation: We recommend that the Organization review the schedule of expenditures of federal awards prior to issuance. Views of responsible officials and planned corrective actions: Management agrees with the finding. See corrective action plan.
2024 – 002: Schedule of Expenditure of Federal Awards (SEFA) Preparation Type of Finding: • Material Weakness in Internal Control Over Financial Reporting Condition: During testing, it was noted the School’s prepared SEFA did not properly reconcile to the underlying School records, which required additional adjustments of approximately $583,000. Criteria or specific requirement: 2 CFR 200.510(b) states: Schedule of expenditures of federal awards. The auditee must also prepare a schedule of expenditures of federal awards for the period covered by the auditee's financial statements which must include the total Federal awards expended as determined in accordance with § 200.502 Basis for determining federal awards expended. While not required, the auditee may choose to provide information requested by federal awarding agencies and pass-through entities to make the schedule easier to use. For example, when a federal program has multiple federal award years, the auditee may list the amount of federal awards expended for each federal award year separately. At a minimum, the schedule must: • List individual Federal programs by Federal agency. For a cluster of programs, provide the cluster name, list individual Federal programs within the cluster of programs, and provide the applicable Federal agency name. For R&D, total Federal awards expended must be shown either by individual Federal award or by Federal agency and major subdivision within the Federal agency. For example, the National Institutes of Health is a major subdivision in the Department of Health and Human Services. • For Federal awards received as a subrecipient, the name of the pass-through entity and identifying number assigned by the pass-through entity must be included. • Provide total Federal awards expended for each individual Federal program and the Assistance Listing number or other identifying number when the Assistance Listing information is not available. For a cluster of programs also provide the total for the cluster. • Include the total amount provided to subrecipients from each Federal program. • For loan or loan guarantee programs described in §200.502 Basis for determining federal awards expended, paragraph (b), identify in the notes to the schedule the balances outstanding at the end of the audit period. This is in addition to including the total Federal awards expended for loan or loan guarantee programs in the schedule. • Include notes that describe that significant accounting policies used in preparing the schedule, and note whether or not the auditee elected to use the 10% de minimis cost rate as covered in § 200.414 Indirect (F&A) costs. Effect: Without a proper system of internal controls in place that operated effectively, material misstatements of the SEFA remained undetected. Cause: Management had not established an effective system of internal controls that would have ensured proper reporting of the SEFA. Repeat finding: Yes – 2023-004. Recommendation: We recommend the school implement internal controls over the SEFA including a reconciliation and review process before submission. Views of responsible officials and planned corrective actions: There is no disagreement with the audit finding.
2024-004: Subrecipient Determination and Monitoring Assistance Listing Number (ALN) and Title: 20.205 Highway Planning and Construction Federal Grantor: U.S. Department of Transportation (DOT) Passed-through: Oregon Department of Transportation (ODOT) Award Identification Numbers and Years: Finding is applicable to all 20.205 awards on the SEFA for 2024 Compliance Requirement: Subrecipient Monitoring Type of Finding: Noncompliance and Material Weakness in Internal Control over Compliance. Prior Year Audit Finding: No Criteria: 2 CFR 200.331 requires pass-through entities (PTEs) like LCOG to make case-by-case determinations whether an agreement casts the party receiving funds as a subrecipient or a contractor (vendor). This determination affects reporting on the SEFA (§200.510(b)(4)). Furthermore, 2 CFR 200.332 requires PTEs to evaluate each subrecipient's risk of noncompliance, monitor their activities to ensure compliance with federal requirements (including reviewing financial and performance reports), and verify that subrecipients subject to the Single Audit requirements have obtained the required audit and take appropriate action on any findings effecting the pass-through program (§200.332(b), (d), and (f)). Effective internal controls should ensure proper classification and that required monitoring activities are performed and documented. Condition: LCOG exhibited weaknesses in its process for determining and monitoring subrecipients under ALN 20.205. Specifically: LCOG did not correctly classify entities receiving funds. Multiple vendors were incorrectly identified as subrecipients on the draft SEFA provided for audit. Two entities meeting the definition of subrecipients were identified during audit procedures; however, LCOG had classified them as vendors and omitted them from the draft SEFA. As a result of misclassifying the actual subrecipients as vendors, LCOG did not perform required subrecipient monitoring activities for these entities, such as conducting and documenting a risk assessment or obtaining and reviewing their Single Audit reporting packages. Questioned Costs: None. Context: The misclassifications were identified during audit testing and review of the draft SEFA. While the entities omitted from the SEFA were later confirmed to be subrecipients, LCOG had not performed the required monitoring steps during the fiscal year. Subsequent review of the Single Audit reports for these two subrecipients during the audit process confirmed they had correctly reported the funds received from LCOG and disclosed no audit findings related to this program. No errors were noted in the initial contracting process with these entities. However, the lack of contemporaneous monitoring represents noncompliance and a control weakness. Cause: LCOG lacks adequate procedures for performing and documenting the subrecipient vs. contractor determination based on the criteria in 2 CFR 200.331. This initial failure led to inaccurate SEFA reporting and the subsequent failure to implement required monitoring protocols for entities that were, in fact, subrecipients. Effect: The failure to correctly identify and monitor subrecipients constitutes noncompliance with 2 CFR 200.332 and resulted in inaccurate SEFA reporting. Although no subrecipient noncompliance impacting the program was ultimately identified in this instance, the absence of required monitoring activities (including risk assessment and review of audit reports) creates a risk that subrecipient noncompliance could occur and not be detected by LCOG in a timely manner. This condition represents a material weakness in internal control over compliance. Recommendation: We recommend LCOG implement procedures to: 99 Formally document the determination of whether entities receiving federal funds are subrecipients or contractors prior to entering into agreements and preparing the SEFA, using the criteria in 2 CFR 200.331. Develop and implement a risk-based monitoring plan for all identified subrecipients, ensuring that required monitoring activities (including review of reports and Single Audits, where applicable) are performed and documented throughout the period of performance. Ensure the SEFA accurately reflects subrecipient relationships and amounts passed through. Auditee Views: While we agree that we did not have a formal monitoring plan in place, now that we are aware of the need for such a plan, we will put a plan in place immediately. Once we became aware, we immediately reviewed the single audit reports all subrecipients. As to whether all subrecipients were properly reported on the SEFA, LCOG and ODOT had been in discussions for several months over whether certain entities contracted by LCOG under the Secure Routes to Schools program were, in fact, subrecipients and was unclear due to conflicting guidance received from various individuals. We will begin consulting with ODOT prior to the audit to make sure they agree with the classification of fund recipients as either contractor or subrecipient.
Item 2024-003: Preparation of Schedule of Expenditures of Federal Awards Identification of federal programs: All Assistance Listing Numbers included on the schedule of expenditures of federal awards for the period from January 1, 2024 to June 30, 2024. Federal award grant number: 204645, 244603, 244590, 242754 Federal agency: U.S. Department of Agriculture, U.S. Department of Treasury Pass-through entity: Minnesota Department of Health and Minnesota Department of Human Services Criteria: The Uniform Guidance (2 CFR 200.510) requires the auditee to prepare the schedule of expenditures of federal awards to cover the correct reporting period and contain certain information to be considered complete. Condition: We noted the initial schedule of expenditures of federal awards presented for audit was incorrectly for the year ended June 30, 2024. Once the correct period was determined and the revised schedule of expenditures of federal awards was received for the period from January 1, 2024 to June 30, 2024, additional findings were noted as follows: Food Distribution Cluster program was not properly grouped by federal Assistance Listing Number. Pass-through entity identifying numbers listed for two programs were incorrect. Coronavirus State and Local Fiscal Recovery Funds had improper identification of the program and pass-through entity identifying number. This program was improperly included in the Food Distribution Cluster. Cause: The exceptions noted above were due to a breakdown in SHN’s procedures to ensure that the schedule of expenditures of federal awards is in accordance with the Uniform Guidance. Further, we noted there is no documented review and approval of the schedule of expenditures of federal awards. Effect: Improper schedule of expenditures of federal awards was presented for audit. Questioned costs: None Context: The schedule of expenditures of federal awards was not prepared consistent with the requirements of the Uniform Guidance (2 CFR 200.510). Repeat finding: No Recommendation: SHN should continue to improve its procedures around the preparation and review of the schedule of expenditures of federal awards. Views of responsible officials of the auditee: SHN concurs with this finding and a response is included in the corrective action plan.
FEDERAL PROGRAM ALL FEDERAL PROGRAMS ON THE SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS AWARD NUMBER ALL AWARDS COMPLIANCE REQUIREMENT REPORTING TYPE OF FINDING MATERIAL NONCOMPLIANCE AND MATERIAL WEAKNESS CRITERIA 2 CFR §200.510 Financial Statements, (b) 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. At a minimum, the schedule must: (1) list individual Federal Programs by Federal agency, (2) for Federal awards received as a subrecipient, the name of the pass-through entity and identifying number assigned by the pass-through entity must be included, (3) provide total Federal awards expended for each individual Federal program and the ALN number or other identifying number when the ALN information is not available, (4) Include the total amount provided to subrecipients from each Federal program, (5) for loan or loan guarantee programs identify in the notes to the schedule the balances outstanding at the end of the audit period. This is in addition to including the total Federal awards expended for loan or loan guarantee programs in the schedule. STATEMENT OF CONDITION During our audit procedures of the Schedule of Expenditures of Federal Awards (SEFA) prepared by the Department, we identified misstatements related to the programs reported in the SEFA. One Federal program was not included in the SEFA, and adjustments were proposed in order to reconcile the information included in the SEFA with the financial statement.PERSPECTIVE INFORMATION The Department failed to identify properly in its records and/or accounting records the Federal grants that they received and expended during the fiscal year, this cause that when the Department prepared the SEFA with the financial statement and for audit purposes the SEFA was incomplete and misstated. STATEMENT OF CAUSE The Department failed to identify the Federal grants expended during the fiscal year and to keep records of the transactions related to the Federal programs in order to properly identify the Federal programs and transactions when the SEFA is prepared causing the preparation of an incomplete and misstated SEFA. POSSIBLE ASSERTED EFFECT The Department may fail to include all Federal programs and total expenditures in the SEFA causing misstatements in the SEFA, errors in the determination if a Uniform Guidance audit is required to the Department and could provoke an incorrect Major Program Determination performed by the auditor, resulting in the most likely exclusion of a Major Program for audit purpose. IDENTIFICATION OF REPEAT FINDING Not applicable. RECOMMENDATIONS We recommend the Department to maintain adequate records related to the Federal programs in order to properly identify the Federal programs/transactions when the SEFA is prepared. Once a Federal award is granted or received, the information must be shared with all personnel involved in the financial statement and SEFA preparation to provide assurance that all required program activities / expenditures are included on the SEFA. In addition, the Department must perform a regular fiscal monitoring over the Federal programs transactions in order to provide reasonable assurance that all Federal programs/transactions are properly recorded and included on the SEFA
Finding 2024-003 - Material Weakness in Internal Control over Compliance and Material Noncompliance (Qualified Opinion) - Inadequate Tracking of Expenditures and Retention of Documentation: Activities Allowed or Unallowed: Allowable Costs/Cost Principles and Reporting (A/B/L) for Assistance Listing Number 19.510 and 93.567 Criteria: The Code of Federal Regulations (CFR) Section 200.510(b) states in part, “The auditee must also prepare a schedule of federal expenditures for the period covered by the auditee’s consolidated financial statements which must include the total Federal awards expended as determined in accordance with 200.502.” Also, in accordance with CFR Section 200.302(b) - Financial Management, the auditees financial management system must provide 1) identification of all federal awards received and expended; 2) accurate, current, and complete disclosure of the financial results of each federal award or program; 3) records that identify adequately the source and application of funds for federally‐funded activities; 4) effective control over, and accountability for, all funds, property, and other assets; 5) comparison of expenditures with budget amounts for each Federal award; 6) written procedures to implement the requirements of section 200.305 and; 7) written procedures for determining the allowability of costs in accordance with Subpart E and the terms and conditions of the Federal award. Recipients of federal awards must submit accurate, complete and timely financial and performance reports. The Organization should have internal controls designed to ensure compliance with those provisions. The Organization should retain sufficient documentation such as invoice and allocation support for expenditures to retain documentation for audit purposes. Condition: During detail testing of expenditures, it was noted that the Organization did not maintain adequate documentation to support how certain costs were allocated to the federal program. Several transactions lacked sufficient detail, such as invoice or expense reimbursement form. Several expenditures selected for testing did not obtain sufficient approval by an individual at the Organization. There was one instance of employee compensation being processed at an approved pay rate and the Center could not provide any supporting documentation such as an offer letter, to substantiate the rate paid. It was noted that quarterly reports provided to the federal program were not reviewed by an individual at the Organization prior to submission to ensure accurate report of expenditures. 2 of the 8 monthly reports sampled were not submitted timely to the grantor. Cause: The Organization does not have an adequate system in place to ensure quarterly reports have sufficient supporting documentation, proper approval/review, and accurate reporting prior to submission. Responsibilities for expenditure tracking were not clearly assigned, and there was no formal review process in place. The Organization is not following their Document Retention Policy. Effect: The effect of this condition increases the possibility that quarterly financial reports are misstated or inaccurate and increase the risk of noncompliance with federal requirements. The effect of this condition also increases the risk that expenditures are unallowable per the grant, federal regulations, or cost principles due to the insufficient support of proper approval retained. Questioned costs: None Repeat Finding: Yes - 2023-003 Recommendation: Policies and procedures should be in place to ensure quarterly financial reports are properly supported, accurately reported, and adequately approved and reviewed. A formal review process should be established to ensure compliance. The Organization should follow the Document Retention Policy that was put in place and required by law and submit the required reporting documentation timely to the grantor to ensure compliance. Views of Responsible Officials: Management agrees with this finding and their response is included in the Corrective Action Plan.
CRITERIA/SPECIFIC REQUIREMENT: The Code of Federal Regulations (Code) (2 CFR §200.510 (b)), establishes criteria and requirements related to the preparation of the schedule of expenditures of federal awards. The Code (2 CFR §200.303 (a)) requires Regional Office of Education No. 39 to establish and maintain effective internal control over the federal award to provide reasonable assurance the Regional Office is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Effective internal controls should include procedures over preparation of the schedule of expenditures of federal awards. CONDITION: The Regional Office of Education No. 39 did not have sufficient internal controls over the preparation of the Schedule of Expenditures of Federal Awards (SEFA) to ensure all federal expenditures during the fiscal year were reported and information in the SEFA was accurately reported. CONTEXT: During our review of the SEFA, we noted the following: Program title descriptions were incorrect. Assistance listing number was incorrectly listed. EFFECT: Failure to report an accurate SEFA affects the required audit coverage to meet federal requirements and can delay an audit beyond the reporting deadline. CAUSE: Management indicated the errors on the SEFA was due to oversight. RECOMMENDATION: The Regional Office of Education No. 39 should establish and implement internal controls over preparation of the SEFA to ensure accurate reporting. MANAGEMENT’S RESPONSE: The Regional Office of Education No. 39 agrees with the audit findings and will work with contracted accounting firm to ensure that the schedule of expenditures of federal awards is accurately reported as required.
Finding 2024-003 - Schedule of Expenditures of Federal Awards (Material Weakness) CFDA Title and Number 84.425 Education Stabilization Fund Name of Federal Agency: U.S. Department of Education CFDA Title and Number 84.010 Grants to Local Education Agencies (Title I) Name of Federal Agency: U.S. Department of Education Compliance/Internal Control over Compliance: Auditee Responsibilities Criteria: CFR Part 200.508, CFR Part 200.510, Auditee Responsibilities state that the auditee must prepare the Schedule of Expenditures of Federal Awards, which must list individual Federal awards by Federal Agency, including the total Federal awards expended, name of the pass-through entity, CFDA number, and total amount provided to subrecipients. The information contained in the Schedule of Expenditures of Federal Awards should be derived from and relate directly to the underlying accounting and other records used to prepare the financial statements. Condition: The Schedule of Expenditures of Federal Awards (SEFA) was presented for audit on an untimely basis, and with values that were not reconciled with the general ledger. Cause: The District staff had insufficient training or support to prepare the SEFA and ensure that it was reconciled with general ledger amounts. District management did not have monitoring policies to recognize and correct the deficiency. Effect or Potential Effect: Errors in recording and reporting of revenues and expenditures of federal awards may not be detected and/or corrected. Because the Auditee’s SEFA that was presented for audit was completed incorrectly, and not reconciled to the general ledger, the SEFA was materially misstated, prior to auditor's correction recommendations. Questioned Cost: No Context: Lack of adequate controls over the Schedule of Expenditures of Federal Awards and related accounting resulted in the following: SEFA was originally presented for auditors with incorrect information. SEFA was not presented for auditors on a timely basis. No reconciliation between federal expenditures reported on the GL and the SEFA was presented. Repeat of a Prior-Year Finding: No Recommendation: We recommend that the District establish policies and procedures to ensure that all Federal awards are identified and reported accurately on future SEFAs. Internal controls should be designed to prevent, detect, or correct errors in a timely manner by performing periodic reconciliations of the SEFA information to the general ledger throughout the fiscal year. The District should provide appropriate training to staff who are assigned to prepare and review the SEFA. District’s Response: The District acknowledges the deficiencies. Corrective Action Plan: The District will establish policies and procedures to ensure that all Federal awards are identified and reported accurately on future SEFA reports. Planned Implementation Date: August 1, 2025 Responsible Person: Director of Business Services, Yamhill County School District No. 8
Finding 2024-001: Internal Control over Preparation of the Schedule of Expenditures of Federal Awards, Assistance Listing Numbers - All Criteria: Per 2 CFR Part 200.510(b): "The auditee must also prepare a Schedule of Expenditures of Federal Awards for the period covered by the auditee's financial statements". The auditee must maintain underlying accounting records used to prepare the Schedule of Expenditures of Federal Awards (SEFA) that tie to the financial statements or a reconciliation that ties to the financial statements, for each individual award. Condition: The Organization failed to provide a complete, accurate Schedule of Expenditures of Federal Awards that reconciled to the financial statements, on a timely basis. Cause: The Organization did not maintain the appropriate underlying records for each individual award necessary to reconcile the expenditures to the financial statements on a timely basis. Effect: This could result in an inaccurate reporting of expenditures that could have a direct and material effect on the financial statements. Recommendation: We recommend management implement policies and procedures in which the Schedule of Expenditures of Federal Awards and underlying records are maintained and reconciled to the financial statements, on a regular basis. Management Response: Share Food has developed procedures and processes to manage, maintain, and reconcilethe financial statements to the schedule of expenditures of federal awards as part of our year end closing procedures. This was implemented, and it is expected that the June 30, 2025 financial reporting package will be timely and accurate.
Federal Expenditures Not Reported in the Schedule of Federal Expenditures of Federal Awards and State Financial Assistance (“SEFA”) Federal Program: Coronavirus State and Local Fiscal Recovery Funds CFDA / Assistance Listing Number: 21.027 Federal Agency: U. S. Department of Treasury Pass-Through Entity: Tennessee Department of Environment and Conservation Fiscal Year Ended June 30, 2024 Criteria Per 2 CFR §200.510(b) and 2 CFR §200.502, entities expending federal awards must accurately identify all federal awards expended during the period and prepare a complete and accurate SEFA that is consistent with amounts recorded in the financial statements. Condition and Context During a subsequent audit, it was identified that federal expenditures totaling $867,515 were not recorded as federal grant revenue or accounts receivable in the financial statements and were also omitted from the SEFA. The amounts were material to total federal expenditures reported under the Uniform Guidance. Cause The omission occurred due to oversight in year-end closing and grant reconciliation procedures, which did not capture the unrecorded federal expenditures at fiscal year-end. Effect The SEFA originally issued was incomplete and understated total federal expenditures by $867,515. As a result, the fiscal year 2024 financial statements were reissued to include the omitted federal expenditures and to present an accurate SEFA in accordance with the Uniform Guidance. Questioned Costs None. Recommendation Management should strengthen year-end grant reconciliation and review procedures to ensure that all federal expenditures are properly recorded and included in the SEFA prior to issuance. Views of Responsible Officials and Planned Corrective Actions See management’s corrective action plan.
Submission of the Audit Package and Data Collection Form - Federal Agency: Various Assistance Listing Number: Multiple Compliance Requirement: Reporting Criteria: Per 2 CFR §200.510(b), the auditee must prepare a Schedule of Federal Awards (SEFA) for the period covered by the auditee’s financial statements. Per §200.512(a), the SEFA must be submitted to the Federal Audit Clearinghouse (FAC) within the required deadline. Condition: The audit reporting package and data collection form for the year ended June 30, 2024, was not submitted to the FAC within the timeframe as required by the Uniform Guidance. Cause: The delay was due to identified discrepancies and inconsistencies in the initial financial statement reconciliations which the Organization subsequently prepared revised reconciliations, made material adjustments to affected accounts, and issued an updated trial balance. This caused a significant delay in the audit testing and wrap up. Effect: To qualify as a low-risk auditee, 2 CFR section 200.520 requires the audit reporting package and data collection form to be submitted to the FAC by the due date for each of the previous two years. Late filing will result in noncompliance with timely submission of financial information to the grantor agencies. Recommendation: We recommend the Organization strengthen its internal controls over the reconciliation process, including implementing a formal review procedure and ensuring reconciliations are supported by complete and accurate documentation prior to audit fieldwork. Timely and accurate reconciliations are critical to maintaining reliable financial reporting and audit readiness. Questioned costs: None Responsible Official's Response: CMJTS acknowledges the delay and has been making improvements to ensure reconciliations are done timely. Accounting staff have been given additional training on bank reconciliations, and they are now reconciling bank transactions daily. This real time reconciling helps ensure that all transactions are processed accurately. Bank reconciliations are then signed off by Finance Manager and the Board Treasurer monthly. Accounting staff have been given additional training on statement of financial position reconciliations and will be reconciling them monthly. The statement of financial position, with supporting documentation, will then be signed off by the Finance Manager monthly.
FINDING 2024-205 The Commission could not provide documentation to support the review of the Schedule of Expenditures of Federal Awards (SEFA) Closing Package. Type of Finding: Material Weakness Assistance Listing Title: Rehabilitation Services - Vocational Rehabilitation Grants to States Assistance Listing Number: 84.126 Federal Award Number: H126A220017, H126A230017, H126A240017 Program Year: October 1, 2021 – September 30, 2023, October 1, 2022 – September 30, 2024, October 1, 2023 – September 30, 2024 Federal Agency: U.S. Department of Education, Rehabilitation Services Administration Compliance Requirement: U.S. Code of Federal Regulations (CFR) 200.510(b ) Questioned Costs: None Criteria: The U.S. Code of Federal Regulations (CFR), Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance) included in 2 CFR 200.303 requires that a nonfederal entity receiving federal awards establish and maintain internal controls that provide reasonable assurance that the nonfederal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions in the federal award. Additionally, 2 CFR 200.510 requires the State to prepare the SEFA, which must include the total federal awards expended for each individual federal award program. The Office of the State Controller requires agencies to complete the SEFA closing package and uses this information to compile the statewide SEFA. Condition: The Commission prepared the SEFA closing package as required but could not provide documentation to show that the closing package was reviewed for accuracy prior to submission. Cause: One Commission employee was listed as the preparer and submitter for the SEFA closing package. Luma did not prevent the same person from preparing and submitting the closing package. The Commission was under pressure to submit the closing package timely and did not document a review process. Effect: We did not detect any errors in the SEFA closing package; however, without a detailed and documented review, errors could be made and remain undetected. Recommendation: We recommend that the Commission design and implement procedures to accurately record, compile, and document the amounts reported in the SEFA closing package and to retain documentation supporting the amounts reported. Management’s View: Agree - ICBVI acknowledges that it did not document the review process for the SEFA closing package. Corrective Action: • Review Documentation: Procedures will be implemented requiring a documented review prior to submission, with signatures from both preparer and reviewer and archiving of supporting schedules. • Procedural Update: We will ensure that the preparer and reviewer/approver are assigned to different individuals for closing packages going forward. This separation of duties will be incorporated into our procedures to strengthen internal controls and enhance the accuracy and integrity of our financial reporting. Auditor’s Concluding Remarks: We thank the Commission for its cooperation and assistance throughout the audit.
FINDING 2024-225 Amounts reported as provided to subrecipients by financial services on the Schedule of Expenditures of Federal Assistance (SEFA) are not properly supported. Type of Finding: Significant Deficiency, SEFA Misstatement Related to Prior Finding: 2023-208; 2022-211; 2021-206 AL Title: Special Supplemental Nutrition Program for Women, Infants, and Children, Temporary Assistance for Needy Families, Child Care and Development Block Grant, Child Care Mandatory and Matching Funds of the Child Care and Development Fund AL Number: 10.557, 93.558, 93.575, 93.596 Federal Award Number: Various Program Year: Various Federal Agency: Department of Health and Human Services Requirement: Code of Federal Regulations (CFR) 2 CFR 200.510(b) Questioned Costs: None Criteria: The U.S. Code of Federal Regulations (CFR), Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance) included in 2 CFR Section 200.303 requires that nonfederal entities receiving federal awards establish and maintain internal control over the federal awards that provides reasonable assurance that the nonfederal entity is managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards. The Internal Control Integrated Framework published by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) identifies control activities that help ensure management directives are carried out and risks are mitigated. These activities include approvals, authorizations, verifications, reconciliations, and segregation of duties. Management objectives should include the preparation and fair presentation of the SEFA in relation to the basic financial statements as a whole and in compliance with requirements contained in 2 CFR 200.510(b), which states, in part, it must include: • Total federal awards expended as determined in accordance with 2 CFR 200.502, and • Total amount provided to subrecipients from each federal program (2 CFR 200.510(b)(4)) The Office of the State Controller (Office) requires agencies to complete the SEFA closing package and uses the reported information to compile the statewide SEFA. Condition: Amounts reported on the SEFA closing package as expenditures to subrecipients did not agree to amounts provided by program staff to auditors for testing purposes. The following programs had discrepancies between what was reported on the SEFA closing package and what was retained by program personnel: • An overstatement of $4,503,700 for the Child Care and Development Block Grant (Assistance Listing Number (AL) 93.575) • An overstatement of $29,079 for the Child Care and Development Block Grant (AL 93.596) • An understatement of $1,014,475 for the Temporary Assistance for Needy Families (AL 93.558) • An understatement of $362,470 for the Special Supplemental Nutrition Program for Women, Infants, and Children (AL 10.557) Cause: Contradicting information was provided by financial services personnel and program personnel related to expenditures to subrecipients reported on the Schedule of Expenditures of Federal Awards (SEFA) closing package for three major programs. A new statewide accounting system (Luma) was implemented in July 2023. The Office provided guidance to the Department on how to code expenditures to subrecipients, using specific account codes. According to financial services personnel, some expenditures to subrecipients were incorrectly coded causing incorrect amounts to be included on the SEFA. The Department has a review process in place for closing packages that is intended to detect and correct errors. However, the review of the fiscal year 2024 SEFA closing package was not completed at a level of detail sufficient to properly identify and correct errors. In addition, Department financial services personnel and program personnel are not communicating effectively to discover and resolve any discrepancies related to expenditures to subrecipients reported on the SEFA. Effect: The amounts provided to subrecipients were misstated in the Department’s SEFA closing package as detailed in the condition section above. The net overstatement is a combination of over and under statements that total $3,155,834 in the Department’s SEFA closing package. Recommendation: We recommend that the Department improve the process of gathering information to prepare the SEFA closing package and review for accuracy at a level of detail sufficient to detect and correct errors in the SEFA closing package. In addition, we recommend that the Department improve training of program personnel regarding the proper coding of the expenditures to subrecipients. Management’s View: The Department Agrees with this finding. Corrective Action: For major grants, Financial Services staff will send a summary of transactions coded as subrecipient payments to the program manager to review prior to inclusion in the SEFA closing package. The review will be requested to be twofold: to ensure that everything that should be included as a subrecipient payment is and to ensure that nothing that should not be considered a subrecipient payment is included. This process helps to identify that we are reporting the accurate amount of expenditures for each subrecipient. Auditor’s Concluding Remarks: We thank the Department for its cooperation and assistance throughout the audit.
FINDING 2024-242 The Division did not accurately report federal grant expenditures on the Schedule of Expenditures of Federal Awards (SEFA) Closing Package. Type of Finding: Significant Deficiency, SEFA Misstatement Assistance Listing Title: Rehabilitation Services – Vocational Rehabilitation Grants to States Assistance Listing Number: 84.126 Federal Award Number: H126A240016, H126A220016, H126A210016 Program Year: October 1, 2020 – September 30, 2022; October 1, 2021 – September 30, 2023; October 1, 2023 – September 30, 2024 Federal Agency: U.S. Department of Education, Rehabilitation Services Administration Compliance Requirement: U.S. Code of Federal Regulations (CFR) 200.510(b ) Questioned Costs: None Criteria: The U.S. Code of Federal Regulations (CFR), Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance) included in 2 CFR 200.303 requires that a nonfederal entity receiving federal awards establish and maintain internal controls that provide reasonable assurance that the nonfederal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions in the federal award. Additionally, 2 CFR 200.510 requires the State to prepare the SEFA, which must include the total federal awards expended for each individual federal award program. The Office of the State Controller requires agencies to complete the SEFA closing package and uses this information to compile the statewide SEFA. Condition: The Division prepared the SEFA closing package as required but could not provide documentation to show that the closing package was reviewed for accuracy prior to submission. Additionally, amounts on the SEFA did not agree with the underlying accounting records in Luma, and Division staff could not provide an explanation for the differences. We identified the following errors based on expenditure transactions that were coded to specific grants in the Federal Grant Fund in Luma: Assistance Listing SEFA Amount Luma Amount Difference 84.126A $18,785,454 $18,285,440 $500,014 93.369 $282,568 $242,954 $39,614 Total Difference $539,628 The Federal Grant Fund also contained transactions that were not directly coded to any specific grant in the amount of $1,168,908. The Division could not provide documentation to show how these expenditures were allocated to individual programs. Cause: The Division has experienced a large amount of turnover in fiscal staff positions. Staff did not retain documentation to support amounts reported. Effect: The Division overstated expenditures, according to Luma, by $500,014 for the Rehabilitation Services-Vocational Rehabilitation Grants to States and also overstated expenditures, according to Luma, by $36,614 for the Independent Living State Grant. Additionally, expenditures in the amount of $1,168,908 were charged to the federal grant fund in Luma but are not identified by grant indicating that errors could be larger. Recommendation: We recommend that the Division design and implement procedures to accurately calculate the amounts reported in the SEFA closing package and to retain documentation supporting the amounts reported. Management’s View: The Division will ensure the accuracy, completeness, and appropriate documentation of all federal grant expenditures reported on the SEFA closing package by implementing effective reconciliation processes, internal review controls, and documentation retention procedures in compliance with 2 CFR 200.303 and 2 CFR 200.510. Corrective Action: 6.1 Develop and Implement Written SEFA Procedures: Create formal written procedures describing how SEFA amounts are compiled, reconciled, reviewed, and approved prior to submission within Grants Management Manual. 6.2 Strengthen Internal Controls and Oversight: Implement internal review and approval steps that require documented verification of SEFA amounts against Luma accounting records. 6.3 Ensure Accurate Grant Coding: Review and correct all federal grant fund transactions not assigned to specific grants, ensuring proper coding and allocation in Luma. 6.4 Training and Staff Development: Provide training to fiscal staff on SEFA preparation, reconciliation, and documentation requirements. 6.5 Establish Continuous Monitoring: Perform periodic reviews of federal expenditure coding and SEFA data to identify discrepancies before year-end reporting. Auditor’s Concluding Remarks: We thank the Division for its cooperation and assistance throughout the audit. We would like to clarify that the SEFA closing package for the state fiscal year 2025 contains several grant phases including, but not limited to, the federal fiscal year (FFY) 2024 award and was due prior to this progress note so it is unclear which SEFA preparation the Division intends to have the improved internal controls impact.
FINDING 2024-244 The Department’s original Schedule of Expenditures of Federal Awards submitted to the Office of the State Controller underreported the amount disbursed to subrecipients by $3,500,000 under the Coronavirus State and Local Fiscal Recovery Fund (CSLFRF) program. Type of Finding: Significant Deficiency, SEFA Misstatement Assistance Listing Title: Coronavirus State and Local Fiscal Recovery Funds Assistance Listing Number: 21.027 Federal Award Number: SLFRP0142 Program Year: March 3, 2021 – December 31, 2024 Federal Agency: Department of Treasury Compliance Requirement: U.S. Code of Federal Regulations (CFR) 200.510(b) Questioned Costs: None Criteria: The U.S. Code of Federal Regulations (CFR), 2 CFR 200.510(b), requires that the State prepare a Schedule of Expenditures of Federal Awards (SEFA) for the fiscal year that must include the total federal awards expended. In addition, the total federal awards expended must be the total amount provided to subrecipients from each federal program. State agencies are required to report federal expenditures incurred for each federal program during the State fiscal year to the Office of the State Controller (Office) through the SEFA closing package. The Office provides instruction on the completion of the closing package. The Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance) included in 2 CFR 200.303 requires that a nonfederal entity receiving federal awards establish and maintain internal controls that provide reasonable assurance that the nonfederal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. The Internal Control Integrated Framework published by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) identifies control activities that help ensure management directives are carried out and risks are mitigated. These activities include things like approvals, authorizations, verifications, reconciliations, and segregation of duties. Condition: The Department failed to report one subrecipient of CSLFRF program on the SEFA in fiscal year 2024. Cause: The Department does not have sufficient controls in place to prevent or detect errors on the SEFA before submission to the Office. Program staff determined that one recipient of CSLFRF funding was a subrecipient. However, review procedures were not performed at the level of detail necessary to ensure amounts passed on to the subrecipient were appropriately identified on the SEFA closing package and did not report all funds passed through. Effect: The statewide SEFA amounts reported as disbursed to subrecipients were underreported by $3,500,000. Recommendation: We recommend that the Department improve training and the review process for the SEFA closing package to ensure appropriate reporting of subrecipient expenditures on the SEFA. Management’s View: The Department of Water Resources agrees with the finding. Corrective Action: The Department will improve training and the review process for the SEFA closing package to ensure appropriate reporting of subrecipient expenditures on the SEFA. The Department will review the FY 20025 SEFA closing package that was submitted to the Office of the State Controller to ensure the appropriate subrecipient expenditures were reported. Auditor’s Concluding Remarks: We thank the Department for its cooperation and assistance throughout the audit.
FINDING REFERENCE NUMBER 2024-002 (See FINDING REFERENCE NUMBER 2024-001) FEDERAL PROGRAM ALL FEDERAL PROGRAMS ON THE SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS AWARD NUMBER ALL AWARDS COMPLIANCE REQUIREMENT REPORTING – SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS TYPE OF FINDING MATERIAL WEAKNESS AND MATERIAL NONCOMPLIANCE CRITERIA 2 CFR §200.510 Financial Statements, (b) 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. At a minimum, the schedule must: (1) list individual Federal Programs by Federal agency, (2) for Federal awards received as a subrecipient, the name of the pass-through entity and identifying number assigned by the pass-through entity must be included, (3) provide total Federal awards expended for each individual Federal program and the ALN number or other identifying number when the ALN information is not available, (4) Include the total amount provided to subrecipients from each Federal program, (5) for loan or loan guarantee programs identify in the notes to the schedule the balances outstanding at the end of the audit period. This is in addition to including the total Federal awards expended for loan or loan guarantee programs in the schedule. STATEMENT OF CONDITION As part of our audit process regarding the submission of the Schedule of Expenditures of Federal Awards (SEFA), we noticed $815,055 that had been reported as part of the expenses for the Disaster Grants – Public Assistance (Presidentially Declared Disasters) program, with Assistance Listing Number (ALN) 97.036. These expenses were recognized in the Department accounting records under fund 201, which is a fund used to recognize matching funds from Federal and non-Federal programs. Upon requesting information about these expenses, we realized that part of this expenditure corresponded to funds from the Community Development Block Grant/State's Program and Non-Entitlements Grants in Hawaii program, with ALN 14.228. The total expenditure corresponding to this program is $730,341, which had initially been reported under ALN 97.036. PERSPECTIVE INFORMATION The Department had consultants who maintained control over the administration of these programs. After the contracts were canceled, no information was retained that would have allowed the Department to validate the expenditures under each program. STATEMENT OF CAUSE The Department recorded expenses related to the matching required by Federal regulation using the same project ID it uses for expenses under ALN 97.036. This resulted in the preparation of the SEFA and Financial Statements incorrectly. The Department does not have an internal control structure that allows them to identify and monitor the expenditure and requisition of Federal funds for programs under ALNs 97.036 and 14.228. POSSIBLE ASSERTED EFFECT The Department may fail to include all Federal programs and total expenditures in the SEFA causing misstatements in the SEFA, errors in the determination if a Uniform Guidance audit is required to the Department and could provoke an incorrect Major Program Determination performed by the auditor, resulting in the most likely exclusion of a Major Program for audit purpose. IDENTIFICATION OF REPEAT FINDING Not applicable. RECOMMENDATIONS We recommend the Department to maintain adequate records related to the Federal programs in order to properly identify the Federal programs/transactions when the SEFA is prepared. Once a Federal award is granted or received, the information must be shared with all personnel involved in the financial statement and SEFA preparation to provide assurance that all required program activities / expenditures are included on the SEFA. In addition, the Department must perform a regular fiscal monitoring over the Federal programs transactions in order to provide reasonable assurance that all Federal programs/transactions are properly recorded and included on the SEFA. VIEWS OF RESPONSIBLE OFFICIALS In response to the Audit finding related to maintaining adequate records the Department will implement and follow up on previous Correction Actions Plans in order to complete the requirements. 1. The Department will maintain adequate accounting records related to the federal programs and properly keep records accessible for each program. And updated SOP was drafted and is pending final review by the Federal Agency (EPA) to implement. 2. The Department drafted a new internal control implementation/Review/Monitoring process in order to resolve the systemic internal controls issues. Specific Work Plan and implementation will be started once final approvals of the aforementioned documents. IMPLEMENTATION DATE June 30, 2026 RESPONSIBLE PERSON Finance Director
FINDING REFERENCE NUMBER 2024-003 (See FINDING REFERENCE NUMBER 2024-001) FEDERAL PROGRAMS ALL FEDERAL PROGRAMS ON THE SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS AWARD NUMBER ALL AWARDS COMPLIANCE REQUIREMENT REPORTING – SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS TYPE OF FINDING MATERIAL WEAKNESS AND MATERIAL NONCOMPLIANCE CRITERIA 2 CFR §200.510 Financial Statements, (b) 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. At a minimum, the schedule must: (1) list individual Federal Programs by Federal agency, (2) for Federal awards received as a subrecipient, the name of the pass-through entity and identifying number assigned by the pass-through entity must be included, (3) provide total Federal awards expended for each individual Federal program and the ALN number or other identifying number when the ALN information is not available, (4) Include the total amount provided to subrecipients from each Federal program, (5) for loan or loan guarantee programs identify in the notes to the schedule the balances outstanding at the end of the audit period. This is in addition to including the total Federal awards expended for loan or loan guarantee programs in the schedule. STATEMENT OF CONDITION During our audit procedures of Federal programs revenues, we identified significant cash receipts for the Disaster Grants – Public Assistance related to reimbursements of payroll and overtime payments previously paid by Bureau state funds. However, we could not identify any expenditures register under the Federal program on Schedule of Expenditures of Federal Awards (SEFA) during the current fiscal year or any prior fiscal year related to the reimbursements received. To include the expenditures as Federal program expenditures, the Bureau staff must recognize fund transfers from the Federal program accounts to state funds accounts by preparing the related journal entries which effectively records the expenditure amounts on the SEFA. As discussed with management, the fund transfers were not made during the fiscal year 2024-2025 nor have any adjustment been registered to recognize the Federal expenditures incurred. The total amount received and expended was $10,017,388. We requested the fund transfers and related entries information if those were performed after the fiscal year end, but as of the date of our audit, no transfers or adjustments had been made. After the condition was identified and discussed with the Bureau management, the corresponding adjustments to correct record the transfers and related expenditures on the Federal program were performed and provided to us to correct the amounts related to the program reported in the SEFA and financial statement as of June 30, 2024. QUESTIONED COSTS None PERSPECTIVE INFORMATION The Bureau failed to identify properly in its records and/or accounting records Federal grants funds that they received and expended during the fiscal year. This cause that when Bureau prepared the SEFA and financial statement for audit purposes the SEFA was incomplete and misstated. Also, this condition has limited the use of the reimburse funds on other operating activities of the Bureau. STATEMENT OF CAUSE The Bureau budget and finance staff failed to identify the Federal program receipts and performed the fund transfers and related journal entries on a timely manner to be included on the correct fiscal year, causing the preparation of an incomplete and misstated financial statement and SEFA initially submitted for audit purposes. POSSIBLE ASSERTED EFFECT The Bureau fail to include all Federal programs expenditures in the SEFA causing misstatements in the SEFA, which may lead to errors in the determination if a Uniform Guidance audit is required to the Bureau and could provoke an incorrect Major Program Determination by the auditors, resulting in the most likely exclusion of a Major Program for audit purpose. Also, since the original expenditures were paid with state funds and the funds received shall be reimbursed to the Bureau state funds accounts, the funds have been idle for a long period of time, limiting the potential use of the funds by the Bureau on operating needs for more than two years. IDENTIFICATION OF REPEAT FINDING Not applicable. RECOMMENDATIONS We recommend the Bureau budget and finance staff to maintain adequate records and controls related to the Federal programs in order to properly identify the Federal programs/transactions when the SEFA is prepared. Once a Federal award is granted or received, the information must be shared with all personnel involved in the financial statement and the SEFA preparation to provide assurance that all require program activities / expenditures are included on the SEFA. In addition, the Bureau must perform a regular fiscal monitoring over the Federal programs transactions in order to provide reasonable assurance that all Federal programs/transactions are properly recorded and included in the SEFA and if any reimbursements to state funds are applicable, that those reimbursements are made on a timely basis.
FINDING REFERENCE NUMBER 2024-004 (See FINDING REFERENCE NUMBER 2024-002) FEDERAL PROGRAM ALL FEDERAL PROGRAMS ON THE SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS AWARD NUMBER ALL AWARDS COMPLIANCE REQUIREMENT REPORTING – SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS TYPE OF FINDING MATERIAL WEAKNESS AND MATERIAL NONCOMPLIANCE CRITERIA 2 CFR §200.510 Financial Statements, (b) 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. At a minimum, the schedule must: (1) list individual Federal Programs by Federal agency, (2) for Federal awards received as a subrecipient, the name of the pass-through entity and identifying number assigned by the pass-through entity must be included, (3) provide total Federal awards expended for each individual Federal program and the ALN number or other identifying number when the ALN information is not available, (4) Include the total amount provided to subrecipients from each Federal program, (5) for loan or loan guarantee programs identify in the notes to the schedule the balances outstanding at the end of the audit period. This is in addition to including the total Federal awards expended for loan or loan guarantee programs in the schedule. STATEMENT OF CONDITION During our audit procedures of the Schedule of Expenditures of Federal Awards (SEFA) prepared by the Bureau, we identified misstatements related to the programs reported in the schedule. One Federal program, ALN 21.027, Coronavirus State and Local Fiscal Recovery Fund, was not included in the SEFA, and material adjustments were made to properly present the Federal program expenditures for the fiscal year on the SEFA and financial statement. QUESTIONED COSTS None PERSPECTIVE INFORMATION The Bureau failed to identify properly in its records and/or accounting records of Federal grants funds that they received and expended during the fiscal year. This cause that when the Bureau prepared the SEFA and financial statement for audit purposes, the SEFA was incomplete and misstated. STATEMENT OF CAUSE The Bureau staff failed to identify the Federal grants expended during the fiscal year and to keep appropriate records of the transactions related to the Federal programs in order to properly identify the Federal programs and transactions when the SEFA is prepared causing the preparation of an incomplete and misstated SEFA initially submitted for audit purposes. POSSIBLE ASSERTED EFFECT The Bureau staff fail to include all Federal programs and total expenditures in the SEFA causing misstatements in the schedule, may lead to errors in the determination if a Uniform Guidance audit is required to the Bureau and could provoke an incorrect Major Program Determination by the auditors, resulting in the most likely exclusion of a Major Program for audit purpose. IDENTIFICATION OF REPEAT FINDING Not applicable. RECOMMENDATIONS We recommend the Bureau to maintain adequate records related to the Federal programs to properly identify the Federal programs/transactions when the SEFA is prepared. Once a Federal award is granted or received, the information must be shared with all personnel involved in the financial statement and SEFA preparation to provide assurance that all required program activities / expenditures are included on the SEFA. In addition, the Bureau must perform regular fiscal monitoring over the Federal programs transactions to provide reasonable assurance that all Federal programs/transactions are properly recorded and included in the SEFA.
Finding 2024-004: U.S. Department of Housing and Urban Development, Community Project Funding Statement of Condition: During the audit of the Schedule of Expenditures of Federal Awards (SEFA), it was noted that management omitted a material federal award from the SEFA. This omission resulted in an inaccurate representation of total federal expenditures and led to the identification and testing of an additional major program that was not initially included in the audit plan. Criteria: Under 2 CFR §200.510(b), the Organization must prepare a SEFA that includes all federal awards expended during the fiscal year. The SEFA is used to determine major programs and assess audit coverage under the Uniform Guidance. Cause: The omission was due to staff turnover in the real estate development department and inadequate internal controls over the compilation and review of the SEFA. Management did not have a formal process to ensure completeness and accuracy of federal award reporting. Effect: The SEFA was materially misstated, which impacted the auditor's major program determination. As a result, an additional major program was required to be tested. Context: The omitted federal award was active during the fiscal year and had significant expenditures that met the threshold for major program consideration. The award was managed by a separate department within the organization, and its exclusion from the SEFA was not identified during internal review processes. The error was discovered during audit fieldwork when reconciling grant activity to the general ledger and federal drawdowns. This indicates a breakdown in communication and oversight between departments responsible for federal award management and financial reporting. Questioned costs: $0 Recommendation: Management should implement stronger internal controls over the preparation and review of the SEFA. This should include reconciliation procedures between grant records, accounting records, and the SEFA, as well as a formal review by finance leadership prior to submission. Management's Response and Corrective Action Plan: Management agrees with the finding and will ensure that the SEFA is accurate going forward via enhanced review of the organizations funding.
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).
2024-004 Type of finding: Federal Award Situation: Significant deficiency; compliance with federal regulations. Federal Program: All Programs Compliance Requirements: Reporting Prior-Year(s) Audit Finding(s): 2023-002, 2022-002 Questioned Costs: None Condition: The Municipality could not provide, on a timely basis, the information needed to complete the preparation of their financial statements, therefore the financial statements were available to be audited after the due date established by the federal government. The Single Audit reporting package, as defined and required in 2 CRF 200.512 for fiscal year ended June 30, 2024, was not submitted timely. Context: The Municipality is required by law to design and implement procedures that support the preparation of its financial statements. The Municipality could not provide, on a timely basis, the information needed to complete the preparation of their financial statements, therefore the financial statements were available to be audited after the due date established by the federal government. Criteria: As per 2 CRF 200.12, the audit, data collection form, and reporting package must be submitted within the earlier of 30 calendar days after receipt of the auditor’s report, or nine months after the end of the audit period. 2 CRF 200.508 states that it is the auditee's responsibility to to (1) prepare financial statements, including the schedule of expenditures of federal awards in accordance with 2 CFR 200.510, (2) promptly follow up and take corrective action on audit findings, including preparing a summary schedule of prior audit findings and a corrective plan, and (3) provide the auditor access to personnel, accounts, books, records, supporting documentation, and any other information needed for the auditor to perform the audit required by this part, among other things. Municipal Code (Law 107, August 2020, as amended) , Chapter 2, Article 2.007 states that the Finance Director will among other things, maintain and guard all books, files and documents related to the accounting and financial activity of the Municipality; take appropriate measures to implement and recommend internal controls procedures to protect and account for Municipal property and funds; and supervise, among other things, the preparation of financial reports. Chapter 8, Article 2.095 states that the Municipality must ascertain that their accounting system complies with the following: (1) Provide complete information on the results of municipal operations; (2) provide the appropriate financial information necessary for an efficient municipal administration (3) has effective control and accounting of all funds, property, and assets belonging to the municipality; and (4) produce reliable reports and financial statements that serve as the basis for the preparation and justification of the budgetary needs of the municipality. Cause: The Municipality’s accounting system does not provide the necessary information for the compilation of their financial statements. In order to address this situation, the Municipality has engaged a consultant to assist with the preparation, analysis, and necessary adjustments to prepare the Municipality’s financial statements. However, this procedure involves the participation of various municipal employees at different levels in the Municipality’s organizational structure which adds time to an already time-consuming task. The financial statements are finally available for audit after being approved by the Municipality. In addition to the situation described above, the Municipality has experienced a backlog in the compilation of the data required for the preparation of their financial statements since the major disaster area declared on September 18, 2022, due to the passage of Hurricane Fiona. Although the federal government granted time flexibilities regarding the submissions of financial statements for the fiscal year ended June 30, 2021, no flexibilities were granted for fiscal year ending June 30, 2022, and beyond. The Municipality issued their June 30, 2023 on June 17, 2025 and submitted their data collection form on August 29, 2025. This situation prevented the timely submission of the current fiscal year Single Audit reporting package. Effect: Because of the situation described above, the financial records needed for the preparation and subsequent audit of the financial statements were not obtained timely. The Municipality did not comply with the report submission requirement since the audit was not submitted within nine months after their fiscal period end date. Auditor’s recommendation: Management should design and implement procedures that support the timely compilation of data and the necessary approvals across management for the preparation of its financial statements. Management should continue to fulfill their auditee responsibilities as stated in 2 CRF 200.508, which among other things, require management to prepare appropriate financial statements and provide the auditor with access to personnel, accounts, books, records, supporting documentation, and other information as needed for the auditor to perform the audit to ensure that subsequent financial reporting packages are submitted timely. View of responsible officials: The Municipality is working diligently to publish its statements on time. In 2025 the Municipality published two audited statements (2022 and 2023) and the 2024 audited statements are expected to be published in January 2026. The 2025 audited financial statements will be published on time. Auditor Comments: The submission dates of the Municipality’s financial statements for the last two years, as published in FAC.gov are as follows: Fiscal Year / Published Date June 30, 2023 / August 29, 2025 June 30, 2022 / October 9, 2024 Audit Status: Unresolved