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
Finding 2024-007 – Schedule of Expenditures of Federal Awards (SEFA) – Incorrect CFDA / Assistance Listing Numbers Reporting; Internal Control over Compliance (Significant Deficiency) Name of Federal Agency: U.S. Environmental Protection Agency Federal Program Name: Nonpoint Source Implementation Grants Assistance Listing Numbers: 66.460 Pass-Through Entity: Oregon Department of Environmental Quality Name of Federal Agency: U.S. Department of Commerce – National Oceanic and Atmospheric Administration Federal Program Name: Pacific Coast Salmon Recovery Program Assistance Listing Numbers: 11.438, 15.015, 15.244 Pass-Through Entity: State of Oregon – Oregon Watershed Enhancement Board (OWEB) Name of Federal Agency: U.S. Department of Agriculture Federal Program Name: National Fish and Wildlife FoundationAssistance Listing Numbers: 10.665 Pass-Through Entity: U.S. Forest Service Name of Federal Agency: U.S. Department of Agriculture Federal Program Name: Natural Resources Conservation Service Assistance Listing Numbers: 10.905 Pass-Through Entity: U.S. Forest Service Name of Federal Agency: U.S. Department of the Interior Federal Program Name: Wildlife, Sport Fish and Restoration Program Assistance Listing Numbers: 15.244 Pass-Through Entity: Bureau of Land Management Name of Federal Agency: U.S. Department of the Interior Federal Program Name: Secure Rural Schools and community Self-Determination – Watershed and water-quality improvements Assistance Listing Numbers: 15.234 Pass-Through Entity: Bureau of Land Management Criteria: Under 2 CFR 200.510(b), auditees must prepare a complete and accurate SEFA including correct Assistance Listing (formerly CFDA) numbers, program names, and amounts. This is essential for proper identification of federal programs and determination of major programs. Condition: The SEFA for fiscal year ended June 30, 2024 was provided after asking for the SEFA repeatedly. When finally received, the SEFA contained incorrect Assistance Listing numbers for multiple programs/awards, which could lead to misclassification of federal awards. Context: The SEFA reported $1,381,646 in federal expenditures across 27 programs/grant agreements. Testing revealed that 23 of the 27 grant awards had incorrect Assistance Listing numbers on the SEFA and were not aligned with agreements or program information. The SEFA was finalized, only after significant auditor follow-up. Cause: Management did not have adequate procedures for compiling and reviewing SEFA information, including verification of Assistance Listing numbers against official sources and award documents. Effect or Potential Effect: Incorrect CFDA / Assistance Listing numbers may: Impair auditor’s ability to properly identify major programs, Result in noncompliance with Uniform Guidance reporting requirements, Increase risk of audit findings and questioned costs in future periods. Questioned Cost: None identified Repeat of a Prior-Year Finding: No, Prior- year did not require a Single Audit. Recommendation: We recommend that Partnership for the Umpqua Rivers: Establish a formal SEFA preparation process, including a checklist for verifying Assistance Listing numbers against award documents and official listings, Assign responsibility for timely SEFA submission, and require supervisory review before providing to auditors. Maintain documentation supporting CFDA/ Assistance Listing numbers and program details in a centralized grant file. District Response: Partnership for the Umpqua Rivers acknowledges the deficiencies. Corrective Action Plan: ____________ (To be completed by Partnership for the Umpqua Rivers) Planned Implementation Date: ___________ Responsible Person: Partnership for the Umpqua Rivers Finance Manager
Reference Number: 2024-024 Prior Year Finding: No Federal Agency: U.S. Department of Health and Human Services State Agency: Department of Human Services Federal Program: Refugee and Entrant Assistance State Administered Programs Assistance Listing Number: 93.566 Award Number and Year: 2201MDRSSS (10/1/2021 – 9/30/2024) 2301MDRSSS (10/1/2022 – 9/30/2026) 2301MDRCMA (10/1/2022 – 9/30/2024) 2401MDRCMA (10/1/2023 – 9/30/2025) Compliance Requirement: SEFA Reporting Type of Finding: Material Weakness in Internal Control over Compliance, Material Noncompliance Criteria or specific requirement: Compliance: 2 CFR, Part 200 – Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, Subpart F, §200.510(b) requires that auditees prepare a schedule of expenditures of Federal awards for the period covered by the auditee's financial statements which must include the total Federal awards expended as determined in accordance with §200.502. Internal Control: Per 2 CFR section 200.303(a), a non-Federal entity must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should comply with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition: A material error was made by the Department of Human Services (Department) in the amount reported for the program on the Schedule of Expenditures of Federal Awards (SEFA). Context: The Department made a late adjustment to their SEFA reporting for the program which reduced total expenditures by $3.77 million, or approximately 10%. Cause: The General Accounting Department consulted with Department to “reasonably” determine the current year federal program expenditures. However, the Department incorrectly accounted for and reported the federal program expenditures as part of their closing reporting package and subsequently reduced expenditures by approximately 10%. Effect: The SEFA was not prepared in accordance with OMB requirements which could impact the major program risk assessment. Questioned costs: None noted. Recommendation: We recommend that the Department review and enhance its reporting procedures and internal controls to ensure that expenditures reported on the SEFA are accurate. Views of responsible officials: Management agrees with the finding.
2024-001 SEFA REPORTING Federal Program Information: Federal Agency and Program Name U.S. Department of Health and Human Services Every Student Succeeds Act/Preschool Development Grants Grant Award G240352 Federal Assistance Listing Number 93.434 Criteria: 2 CFR 200.303 requires that a non-federal entity must “(a) establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States and the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).” 2 CFR 200.510(b) states that “the auditee must also prepare a schedule of expenditures of Federal awards for the period covered by the auditee’s financial statements which must include the total Federal awards expended as determined in accordance with 2 CFR 200.502.” Condition: The Organization’s internal controls are not adequate to ensure that the schedule of expenditures of Federal awards (SEFA) accurately reports Federal assistance. The Organization did not identify its expenditures under Assistance Listing 93.434 in fiscal year 2024. Questioned Costs: $0 Context: Total federal expenditures for Assistance Listing 93.434 were $2,860,000 for the year ended June 30, 2024. Cause: The Organization does not have adequate internal controls in place to ensure the accuracy of the SEFA. Effect: The Organization is not reporting accurate financial information in its SEFA. Identification as a Repeat Finding: This is not a repeat finding. Recommendation: We recommend that the Organization implement additional controls over financial reporting, including the SEFA, to ensure accuracy of financial data. Views of Responsible Officials: Management acknowledges the finding. See corrective action plan.
Finding 2024-001: Preparation of the Schedule of Expenditures of Federal Awards Material weakness/other matter noncompliance Federal Agency: U.S. Department of Homeland Security Program Name: Transit Security Grant Programs ALN Number: 97.075 Award Number: 97.075 Award Year: 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 (SEFA) for the period covered by its financial statements which must include the total Federal Awards expended as determined in accordance with 2 CFR 200.502. Condition: The SEFA for the year ended June 30, 2024 excluded $2,385,715 in expenditures incurred from the total expenditures reported for the federal awards for ALN 97.075 Rail and Transit Security Grant Program. Cause: The existing internal control procedures for processing funding source reclassifications are not structured to fully support the SEFA reporting cutoff deadline. While a process is in place, it does not fully incorporate all necessary stakeholders early enough in the cycle to ensure timely communication, coordinated review, and approval of reclassifications leading to eligible expenditures being omitted. Effect: Not in compliance with the Uniform Guidance (2 CFR 200.510b). There could be impacts on future funding. Context: As a result of the omission of eligible expenditures, total federal awards for ALN 97.075, Rail and Transit Security Grant Program, were understated by $2,385,715 due to the exclusion of expenditures. This understatement caused the major program determination to be improperly calculated and resulted in a missed major program. Question Costs: None 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 and acknowledges that internal control procedures should be strengthened to ensure adherence to the SEFA reporting cutoff deadline. To address this issue, Management will implement a verification checklist as required supporting documentation for all funding source reclassification journal entries and vouchers, ensuring that all relevant departments have reviewed and approved the entries prior to being posted. The Authority will also establish a cutoff date for Program Offices to submit current year reclassification requests, allowing adequate time for eligibility review and fiscal yearend reporting. In addition, Accounting Policies and Procedures Manual will be updated to include guidelines limiting reclassifications of expenditures incurred in prior fiscal years. The Authority will communicate policy updates incorporate these changes to ensure consistent application across departments.
Assistance Listing, Federal Agency, and Program Name ALN 21.027, Department of the Treasury, COVID 19 Coronavirus State and Local Fiscal Recovery Funds Federal Award Identification Number and Year SLFRP 0127 2024 Pass through Entity EHDMMWJY1735 Finding Type Material weakness and material noncompliance with laws and regulations Repeat Finding No Criteria Per 2 CFR 200.510(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. Condition The City did not report federal expenditures as pass through on the orginial issuance of the June 30, 2024 single audit report. Questioned Costs None If questioned costs are not determinable, description of why known questioned costs were undetermined or otherwise could not be reported Not applicable Identification of How Questioned Costs Were Computed Not applicable Context $723,526 of federal expenditures orginally reported as direct should have been classified as pass through expenditures. Cause and Effect The City did not have a control to ensure the pass through awards were properly identified on the Schedule of Expenditures of Federal Awards. As a result, the original report was incorrect and $723,526 were reclassified from direct awards to pass through awards in the reissued report. Recommendation We recommend that an internal process be put in place to track awards that are pass through. Views of Responsible Officials and Planned Corrective Actions The City will ensure that all future awards under this program are in compliance and separately reported on the Schedule of Expenditures of Federal Awards. All pass-through expenditures will be reconciled to ensure accuracy going forward.
Assistance Listing, Federal Agency, and Program Name ALN 21.027, Department of the Treasury, COVID 19 Coronavirus State and Local Fiscal Recovery Funds Federal Award Identification Number and Year SLFRP 0127 2024 Pass through Entity EHDMMWJY1735 Finding Type Material weakness and material noncompliance with laws and regulations Repeat Finding No Criteria Per 2 CFR 200.510, the determination of when a Federal award is expended must be based on when the activity related to the Federal award occurs. Per 2 CFR 200.502(a)(1), expenditure/expense transactions associated with grants, cooperative agreements, cost reimbursement contracts under the FAR, compacts with Indian Tribes, and direct appropriations are included. Condition The City did not report certain federal expenditures on the Schedule of Expenditures of Federal Awards (SEFA). Questioned Costs None If questioned costs are not determinable, description of why known questioned costs were undetermined or otherwise could not be reported Not applicable Identification of How Questioned Costs Were Computed Not applicable Context The City is utilizing several sources of funding to improve their utility systems. The amount expended was not orginally classified as a federal expenditure for the year ended June 30, 2024, and therefore was not included on the SEFA. However, it should have been reported as an expenditure of ARPA funds. Cause and Effect The City did not have a control to place to properly identifiy expenditures of federal awards on the SEFA. As a result, the orginal expenditures for APRA were understated by $1,180,649. Recommendation We recommend that the City review award agreements and track expenditures associated with awards for proper inclusion on SEFA. Views of Responsible Officials and Planned Corrective Actions The City will ensure that all future expenditures are tracked and reported to the proper periods and recorded appropriately.
Federal Program(s): SEFA Reporting (all programs) Compliance Area: Reporting (SEFA completeness and accuracy) Type of Finding: Material Weakness in Internal Control over Financial Reporting and Compliance Criteria 2 CFR §200.510(b) requires the auditee to prepare a complete and accurate Schedule of Expenditures of Federal Awards (SEFA) that includes the total federal awards expended for the period, identified by federal agency, pass-through entity (as applicable), assistance listing number (ALN), and other required elements. 2 CFR §200.303 requires the auditee to establish and maintain effective internal controls over federal awards to provide reasonable assurance of compliance with statutes, regulations, and the terms and conditions of federal awards. Under GAGAS and Uniform Guidance, internal controls should ensure that federal expenditures are properly accumulated, reconciled, reviewed, and reported in the SEFA. Condition Our audit of the SEFA for the year ended June 30, 2024, federal expenditures totaling approximately $6,048,485 were omitted from the SEFA initially prepared by management. The omitted amount represented approximately 54% of total federal expenditures for the year and included activity under the CoronaVirus Capital Project Fund, ALN 21.029. The SEFA was subsequently adjusted to include these expenditures. Our audit of the SEFA for the year ended June 30, 2024, federal expenditures totaling approximately $2,786,421 were omitted from the SEFA initially prepared by management. The omitted amount represented approximately 55% of total federal expenditures for the year and included activity under the CoronaVirus State and Local Fiscal Recovery Program, ALN 21.027. The SEFA was subsequently adjusted to include these expenditures. Cause The entity’s SEFA preparation process did not include sufficient procedures to ensure completeness. Specifically: • The SEFA was prepared using incomplete grant tracking reports that were not reconciled to the general ledger and grant agreements. • There was no formal secondary review by personnel independent of the preparer. • Subrecipient and pass-through activity (as applicable) was not fully captured in the SEFA compilation. Effect The omission resulted in an initially materially misstated SEFA and noncompliance with SEFA reporting requirements under 2 CFR §200.510(b). The deficiency required significant auditor proposed adjustments to correct the SEFA. This control deficiency constitutes a material weakness because it indicates that the entity’s internal controls over SEFA preparation were not effective to prevent or detect a material misstatement on a timely basis. In addition, the incomplete SEFA could lead to inaccurate reporting to oversight agencies and may affect risk assessments for program compliance. Questioned Costs None. (Reporting finding only; no direct noncompliant costs identified. Perspective Information This issue reflects a systemic control deficiency affecting the SEFA as a whole rather than a single program. The magnitude of the omitted expenditures indicates a pervasive weakness in reporting controls. Identification as a Material Weakness We consider this deficiency a material weakness in internal control over financial reporting and compliance related to SEFA preparation because it resulted in a material misstatement of the SEFA and required significant auditor intervention to correct. Recommendation 1. Comprehensive Reconciliation: Reconcile federal grant activity (drawdowns, expenditures, indirect costs) to the general ledger, grant agreements, and agency/portal records. 2. Program Inventory & Certifications: Maintain a centralized inventory of all federal awards (by ALN, pass-through, award number) with program manager certifications of completeness at year-end. 3. Formal Review Workflow: Establish a documented secondary review by finance leadership independent of the preparer, with checklists covering ALNs, pass-throughs, subrecipient disclosures, notes to SEFA, and indirect cost treatment. 4. Subrecipient & Pass-Through Controls: Implement procedures to capture and verify all subrecipient amounts, pass-through activity, and required subrecipient disclosures on the SEFA. 5. Close Calendar & Training: Adopt an annual SEFA close calendar with milestones and provide training on Uniform Guidance reporting requirements to staff involved in SEFA compilation and review. Views of Responsible Officials and Planned Corrective Action (2 CFR §200.511(c)) Management Response: Management agrees with the finding. The omission resulted from incomplete reconciliation of grant activity and insufficient review controls.
Late Submission of the Single Audit Reporting Package/Preparation of the Schedule of Expenditures of Federal Awards Material Weakness/Non-compliance ALN: All programs Condition The organization did not complete and submit the single audit reporting package to the federal audit clearinghouse within the required timeframe and did not prepare a Schedule of Expenditures of Federal Awards (SEFA). Criteria In accordance with 2 CFR §200.512(a)(1) and §200.512(a)(2), a non-federal entity that expends $750,000 or more in federal awards during a fiscal year is required to submit the Single Audit reporting package to the Federal Audit Clearinghouse (FAC) no later than the earlier of 30 calendar days after receipt of the auditor’s reports or nine months after the end of the audit period. In addition, in accordance with 2 CFR §200.510(b), a SEFA must also be prepared. Cause This condition primarily resulted from the Organization’s limited prior experience with federal awards and the related Single Audit requirements, including preparation of the SEFA and submission of the reporting package to the Federal Audit Clearinghouse. Additionally, the Organization was not initially aware that certain grant funds received were federal in nature, which contributed to delays in identifying applicable reporting requirements. Effect or Potential Effect Failure to prepare a SEFA and submit the Single Audit reporting package timely may result in increased oversight by federal awarding agencies or pass-through entities and may affect the organization’s compliance status that could ultimately lead to loss of federal grant funding. Questioned Costs No questioned costs. Repeat finding This is not a repeat finding. Recommendation We recommend the Organization implement internal controls to monitor and reconcile federal grant awards for preparation of a complete and accurate SEFA within the requirements of 2 CFR §200.510(b). Additionally, we recommend the Organization evaluate federal grants during the yearend close process to ensure if single audit thresholds are met (federal expenditures in excess of $750,00 through June 30, 2025 and $1 million subsequent) a single audit is performed and submitted within regulation deadlines. Management’s Response We agree with auditors finding and have implemented internal controls to track the expenditures of federal awards to ensure the SEFA is prepare correctly and future single audits are conducted timely and submissions of the single audit reporting package are done within the required timeframe under Uniform Guidance.
Finding Reference: 2024-004 – Other finding – SEFA Preparation Federal Program Information Federal Agencies: Department of Treasury Awards: Assistance Listing 21.027 – COVID-19 - Coronavirus State and Local Fiscal Recovery Funds Award Periods: July 1, 2023 – December 31, 2026 Description: Preparation of Schedule of Expenditures of Federal Awards Criteria The Uniform Guidance 2 CFR section 200.303 states, “The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).” The Uniform Guidance 2 CFR section 200.510 states, “(b) Schedule of expenditures of Federal awards. The auditee must also prepare the Schedule for the period covered by the auditee’s financial statements which must include the total Federal awards expended as determined in accordance with §200.502 Basis for determining Federal awards expended.” Condition The Corporation did not have appropriately designed internal controls in place to determine the correct amount of federal expenditures to be included on the Schedule. The Corporation omitted the expenditures related to the Assistance Listing Number 21.027 – COVID-19 - Coronavirus State and Local Fiscal Recovery Funds as well as expenditures related to seven other assistance listing numbers. Cause The Corporation did not design internal controls to completely and accurately report expenditures within the Schedule. Effect or potential effect The Schedule prepared by the Corporation was misstated but was subsequently corrected. A misstated Schedule could result in the improper selection of federal award major programs or an incorrect percentage of coverage being calculated resulting in a restatement of a previously issued Uniform Guidance report. Questioned costs None. Identification of a repeat finding This is a repeat finding of Finding 2023-002. Context Expenditures for Assistance Listing 21.027 of approximately $339,000 were excluded from the Schedule. In addition, expenditures totaling approximately $261,000 for seven other assistance listing numbers were also excluded from the Schedule. Recommendation The Corporation should update its policies and procedures and internal controls to ensure accurate reporting of the Schedule as required by the Uniform Guidance. View of responsible officials There is no disagreement with the audit finding.
State Agency: Illinois Department of Human Services (IDHS) Federal Agency: U.S. Department of Health and Human Services (USDHHS) Program Name: Temporary Assistance for Needy Families, Child Care and Development Fund (CCDF) Cluster ALN and Program Expenditures: 93.558 ($583,126,272), 93.575/93.596 ($747,612,292) Award Numbers: Various – see table of award numbers Federal Award Year: Various – see table of award numbers Questioned Costs: Cannot be determined Compliance Requirement: Activities Allowed/Unallowed, Allowable Costs/Cost Principles Finding 2024-006: Inadequate Process for Monitoring Interagency Program Expenditures Condition Found: IDHS does not have an adequate process for monitoring interagency expenditures claimed under or used to meet maintenance of effort (MOE) requirements of the Temporary Assistance for Needy Families (TANF) and CCDF Cluster (CCDF) programs. Federal and State expenditures under the TANF and CCDF Cluster programs are comprised of programs operated by various State agencies. As the State agency responsible for administering these programs, IDHS has executed interagency agreements with each of the State agencies expending federal and/or State program funds. The interagency agreements require periodic reporting of a summary of the agency’s “allowable” expenditures to IDHS for preparation of the financial reports required for each program. As the State agencies expending program funds do not determine under which program IDHS reports their expenditures, IDHS is responsible for establishing procedures to ensure the expenditures reported by the expending State agencies meet the specific requirements applicable to the federal program. During the year ended June 30, 2024, IDHS reported expenditures from other agencies that were claimed for reimbursement or used to meet MOE requirements as follows: "See Table in the Audit Report" IDHS’ procedures to monitor other State agencies expending program funds reported by IDHS include the following: • Interagency agreements were reviewed and updated (where necessary) to include all State programs claimed under or used to meet MOE requirements of the TANF and CCDF Cluster programs in its interagency agreement. • Program questionnaires were updated where necessary and distributed to each of the State agencies to assist in documenting the nature of the expenditures provided to IDHS and the internal controls established to ensure compliance with the applicable federal regulations. • Quarterly certification reports were collected from each of the State agencies to support amounts reported in the federal reports required for each federal program. • Expenditure details were obtained from each of the State agencies and were reconciled to the quarterly certifications. However, during our test work over the documentation of the monitoring procedures discussed above, we noted the following deficiencies: • Program questionnaires describing internal control procedures for the CCDF program were not obtained by IDHS from the Illinois Student Assistance Commission, Illinois Board of Higher Education, and Illinois Community College Board. Rather, a more limited questionnaire was obtained in the State's Grant Accountability and Transparency Act (GATA) Audit Report Review Management System (ARRMS) which is used to complete risk assessments procedures for the State’s subrecipients. • Quarterly certification reports were not prepared during the period for the CCDF program by the Illinois Student Assistance Commission, Illinois Board of Higher Education, and Illinois Community College Board. IDHS did not perform a detailed review of costs claimed from expenditures reported by any of the other State agencies to ensure they met the specific program requirements. The other State agencies do not necessarily know which federal program or maintenance of effort requirement the costs they are providing to IDHS will be claimed or used and are not able to assess whether the costs are allowable. Further, IDHS did not assess whether the expenditures reported by other State agencies were paid during State fiscal year 2024 to ensure the amounts reported to the Illinois Office of Comptroller (IOC) and used to prepare the schedule of expenditures of federal awards (SEFA) were cash basis expenditures. • During our detailed testing over CCDF funds expended by the Illinois Student Assistance Commission and Illinois Community College Board, we noted the amounts passed through to ISAC that were initially reported on the final expenditure questionnaire received for audit did not reconcile to the amount of expenditures on a cash basis for SEFA reporting. Further, we noted the amounts were reported as subrecipient expenditures, however, ultimately were reclassified as beneficiary payments, resulting in a SEFA error. Criteria or Requirement: According to 2 CFR 200.510(b), a recipient of federal awards is required to prepare a schedule of expenditures of Federal awards (SEFA) for the period covered by the entity’s financial statement which must include the total Federal awards expended as determined in accordance with 2 CFR 200.502. Among other things required by 2 CFR 200.510(b), the SEFA must include the total amount provided to subrecipients from each Federal program. Additionally, 2 CFR 200.303 requires non-Federal entities receiving Federal awards to establish and maintain internal control designed to reasonably ensure compliance with Federal laws, regulations, and program compliance requirements. Effective internal controls should include procedures to ensure federal expenditures are accurately reported on the SEFA and to other State agencies, where applicable. Cause: In discussing these conditions with IDHS officials, management stated the current monitoring process was not adequate to ensure interagency expenditures and MOE of federal monies from other State agencies met applicable program regulations as they relate to TANF and CCDF. Possible Asserted Effect: Failure to properly monitor interagency expenditures may result in claiming of expenditures that are inconsistent with the objectives of the federal program and federal funds being expended for unallowable purposes. Repeat Finding: A similar finding was reported in the prior year audit as finding number 2023-017. (Finding Code 2024-006, 2023-017) Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendation: We recommend IDHS review its current process for identifying and reporting interagency expenditures and implement monitoring procedures to ensure that federal and state expenditures expended by other State agencies meet the applicable program regulations. Views of IDHS Officials: IDHS accepts the recommendation. IDHS will establish additional controls to ensure expenditures related to federal grants (including those made by other agencies and those made to subrecipients) are accurately reported. IDHS will implement additional monitoring procedures over interagency expenditures to include sampling and review of supporting documentation to ensure the expenditures meet federal program requirements.
State Agency: Illinois Department of Human Services (IDHS) Federal Agency: U.S. Department of Agriculture (USDA), U.S. Department of Health and Human Services (USDHHS) Program Name: Supplemental Nutrition Assistance Program Cluster, Special Supplemental Nutrition Program for Women, Infants, and Children, Food Distribution Cluster, Rehabilitation Services – Vocational Rehabilitation, Temporary Assistance for Needy Families Child Care and Development Fund (CCDF) Cluster, Social Services Block Grant, Block Grants for Prevention and Treatment of Substance Abuse, Disability Insurance/SSI Cluster ALN and Program Expenditures: 10.551/10.561 ($4,687,993,367), 10.557 ($181,526,312), 10.565/10.568/10.569 ($67,875,839), 84.126A ($138,992,957), 93.558 ($583,126,272), 93.575/93.596 ($747,612,292), 93.667 ($55,634,435), 93.959 ($114,897,412), 96.001/96.006 ($75,260,007) Award Numbers: Various – see table of award numbers Federal Award Year: Various – see table of award numbers Questioned Costs: None Compliance Requirement: None Finding 2024-014: Inaccurate Reporting of Federal Expenditures Condition Found: IDHS did not accurately report Federal expenditures, including amounts provided to subrecipients, under the Supplemental Nutrition Assistance (SNAP) Cluster, Supplemental Nutrition for Women, Infants, and Children (WIC) programs, Food Distribution Cluster (FDC), Vocational Rehabilitation (VR), Temporary Assistance for Needy Families (TANF), Child Care Development Funds (CCDF) Cluster, Social Services Block Grants (SSBG), Block Grants for Prevention and Treatment of Substance Abuse (SAPT), and Disability Insurance/SSI (SSDI) Cluster.Federal expenditures, including amounts provided to subrecipients, reported to the Illinois Office of Comptroller (IOC) which were used to prepare the schedule of expenditure of federal awards (SEFA) did not agree to IDHS’ financial records provided for audit. Specifically, we noted the following differences between amounts provided for audit by IDHS and the SEFA amounts reported to the IOC for each program for the year ended June 30, 2024: "See Table in the Audit Report" The following differences were also identified relative to amounts provided to subrecipients for the following major programs: "See Table in the Audit Report" Additionally, we noted the cash basis expenditures provided by IDHS for our audit procedures included accrued (not paid) expenditures. We also noted these same amounts were reported to the IOC and were used to prepare the SEFA. Specifically, we noted expenditures that were not paid as of June 30, 2024, were erroneously reported as cash basis expenditures for the year ended June 30, 2024: "See Table in the Audit Report" We also noted the interagency expenditures provided by IDHS for our audit procedures included out of period expenditures. These same amounts were reported to the IOC and were used to prepare the SEFA. Specifically, we noted TANF Emergency Assistance (EA) payments which were claimed in fiscal year 2024 but reported in fiscal year 2023 totaling $14,275,633, and we noted EA payments which were claimed in fiscal year 2025 but were reported in fiscal year 2024 totaling $14,742,262. The net impact is an overstatement of TANF expenditures of $466,629 for the year ended June 30, 2024. Finally, we noted IDHS’ controls over reporting federal expenditures were not designed at a sufficient level of precision to ensure complete and accurate reporting in a timely manner. Criteria or Requirement: According to 2 CFR 200.510(b), a recipient of federal awards is required to prepare a schedule of expenditures of Federal awards (SEFA) for the period covered by the entity’s financial statement which must include the total Federal awards expended as determined in accordance with 2 CFR 200.502. Among other things required by 2 CFR 200.510(b), the SEFA must include the total amount provided to subrecipients from each Federal program. Additionally, 2 CFR 200.303 requires non-Federal entities receiving Federal awards to establish and maintain internal control designed to reasonably ensure compliance with Federal laws, regulations, and program compliance requirements. Effective internal controls should include procedures to ensure federal expenditures are accurately reported on the SEFA and to other State agencies, where applicable. Cause: In discussing these conditions with IDHS officials, management stated that the differences in the amounts of federal expenditures in IDHS’ records compared to the IDHS SEFA were due to inclusion of accrued expenditures in IDHS’ records and some slight differences related to vouchers in transit at the end of the fiscal year. Differences in the amounts passed through to subrecipients were also related to vouchers in transit at the end of the fiscal year, and IDHS’ records for one federal grant program did not initially include non-cash expenditures which had been included on the IDHS SEFA. Possible Asserted Effect: Failure to accurately report federal expenditures hinders the completion of an audit in accordance with the Uniform Guidance which may result in the suspension of federal fund Repeat Finding: A similar finding was reported in the prior year audit as finding number 2023-012. (Finding Code 2024-014, 2023-012, 2022-010) Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendation: We recommend IDHS establish procedures to accurately report federal expenditures (including subrecipient expenditures) used to prepare the SEFA to the IOC. Views of IDHS Officials: The Department accepts the recommendation. IDHS will establish additional procedures to ensure federal expenditures (including subrecipient expenditures) are accurately reported.
State Agency: Illinois Student Assistance Commission (ISAC) Federal Agency: U.S. Department of Health and Human Services (USDHHS) Program Name: Child Care and Development Fund (CCDF) Cluster ALN and Program Expenditures: 93.575/93.596 ($747,612,292) Award Numbers: Various – see table of award numbers Federal Award Year: Various – see table of award numbers Questioned Costs: None Compliance Requirement: None Finding 2024-028: Inaccurate Reporting of Federal Expenditures Condition Found: ISAC did not accurately report Federal expenditures, including amounts passed-through to subrecipients, under the CCDF Cluster. Federal expenditures, including amounts provided to subrecipients, reported to the Illinois Office of Comptroller (IOC) which were used to prepare the schedule of expenditure of federal awards (SEFA), did not agree to ISAC’s financial records provided for audit. Specifically, we noted the following differences between amounts provided for audit by ISAC and the amounts passed through to subrecipients of the CCDF Cluster program reported to the IOC for the SEFA for the year ended June 30, 2024: "See Table in the Audit Report" Finally, we noted ISAC’s controls over reporting federal expenditures, including amounts passed-through to subrecipients, were not designed at a sufficient level of precision to ensure complete and accurate reporting in a timely manner. Criteria or Requirement: According to 2 CFR 200.510(b), a recipient of federal awards is required to prepare a schedule of expenditures of Federal awards (SEFA) for the period covered by the entity’s financial statements which must include the total Federal awards expended as determined in accordance with 2 CFR 200.502. Among other things required by 2 CFR 200.510(b), the SEFA must include the total amount provided to subrecipients from each Federal program.Additionally, 2 CFR 200.303 requires non-Federal entities receiving Federal awards to establish and maintain internal control designed to reasonably ensure compliance with Federal laws, regulations, and program compliance requirements. Effective internal controls should include procedures to ensure federal expenditures, including amounts passed-through to subrecipients, are accurately reported on the SEFA and to other State agencies, where applicable. Cause: In discussing these conditions with ISAC management, they stated they presented these beneficiary payments as amounts passed through to subrecipients in accordance with guidance provided by parties responsible for the State’s financial reporting process. Possible Asserted Effect: Failure to accurately report federal expenditures impedes the completion of an audit in accordance with the Uniform Guidance which may result in the suspension of federal funding. Repeat Finding: A similar finding was not reported in the prior year audit. (Finding Code 2024-028) Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendation: We recommend ISAC establish procedures to accurately report federal expenditures (including subrecipient expenditures) used to prepare the SEFA to the IOC. Views of ISAC Officials: ISAC accepts the finding. During the year ended June 30, 2024, payments totaling $79,103,694 were made to educational institutions for the direct benefit of eligible beneficiaries, as reflected in ISAC’s internal accounting records for the same fiscal year. ISAC believes federal expenditures were appropriately made to beneficiaries who were determined to have qualified under the program and that the amount of the total expenditures was correct. The classification of these amounts on the SEFA for the year ended June 30, 2024, was done using the same methodology applied in the prior fiscal year based on reporting guidance received for that fiscal year. ISAC maintained the established reporting framework, in preparing the SEFA for the fiscal year ended June 30, 2024. ISAC agrees that the amounts should not have been reported as payments to subrecipients on the SEFA for the fiscal year ended June 30, 2024. ISAC continues to maintain adequate internal controls designed to ensure federal expenditures are accurately recorded in its accounting records and are properly presented in accordance with the applicable guidance within 2 CFR 200.
State Agency: Illinois Department of Employment Security (IDES) Federal Agency: U.S. Department of Labor (USDOL) Program Name: Unemployment Insurance Program ALN and Program Expenditures: 17.225 ($2,329,354,603) Award Numbers: Various – see table of award numbers Federal Award Year: Various – see table of award numbers Questioned Costs: None Compliance Requirement: None Finding 2024-033: Inaccurate Reporting of Federal Expenditures Condition Found: IDES did not accurately report Federal expenditures under the Unemployment Insurance (UI) program. Federal expenditures reported to the Illinois Office of Comptroller (IOC) which were used to prepare the schedule of expenditure of federal awards (SEFA) did not agree to IDES’s financial records provided for audit. Specifically, we noted the following difference between amounts provided for audit by IDES and the SEFA amounts reported to the IOC for the Unemployment Insurance program for the year ended June 30, 2024: "See Table in the Audit Report" Finally, we noted IDES’s controls over reporting federal expenditures were not designed at a sufficient level of precision to ensure complete and accurate reporting in a timely manner. Criteria or Requirement: According to 2 CFR 200.510(b), a recipient of federal awards is required to prepare a schedule of expenditures of Federal awards (SEFA) for the period covered by the entity’s financial statements which must include the total Federal awards expended as determined in accordance with 2 CFR 200.502. Additionally, 2 CFR 200.303 requires non-Federal entities receiving Federal awards to establish and maintain internal controls designed to reasonably ensure compliance with Federal laws, regulations, and program compliance requirements. Effective internal controls should include procedures to ensure federal expenditures are accurately reported on the SEFA. Cause: In discussing these conditions with IDES officials, they stated the cause of the difference was the result of a large audit adjustment related to return of debit cards from a third party bank who sopped serving the program in December 2021. Possible Asserted Effect: Failure to accurately report federal expenditures inhibits the completion of an audit in accordance with the Uniform Guidance which may result in the suspension of federal funding. Repeat Finding: A similar finding was reported in prior year audit as finding number 2023-042. (Finding Code 2024-033, 2023-042) Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendation: We recommend IDES establish procedures to accurately report federal expenditure used to prepare the SEFA to the IOC. Views of IDES Officials: The Agency accepts the recommendation and will adjust for returned debit cards in accordance with the final resolution determined in consultation with the Comptroller and financial statement auditors for State fiscal year 2024 if this situation should arise again.
Finding 2024-001: Preparation of the Schedule of Expenditures of Federal Awards – Significant Deficiency in Internal Control Over Compliance Federal Program: Medicaid cluster (Assistance Listing No. 93.778) Federal Agency: U.S. Department of Health and Human Services Award Year: 2023-2024 Criteria: The Uniform Guidance (2 CFR 200) Section200.303(a) states that the non-federal entity must establish and maintain effective internal control over the federal award that provides reasonable assurance that the nonfederal entity is managing the federal award in compliance with federal statutes, regulations, and terms and conditions of the federal award. In addition, 2 CFR 200.510 requires an auditee to prepare a schedule of expenditures of Federal awards (SEFA) for the period covered by the auditee’s financial statements that, at a minimum, lists all individual Federal programs by Federal agency and provides total Federal awards expended for each individual Federal program. In accordance with the Uniform Guidance, the Organization is required to maintain a structure of internal control to ensure compliance with applicable reporting requirements. Condition / Context: During audit procedures over expenditures of federal awards for the year ended June 30, 2025, we noted that California Advancing & Innovating Medi-Cal Providing Access and Transforming Health Initiative: Capacity and Infrastructure Transition, Expansion, and Development (PATH CITED) grant Federal funding in the amount of $2,692,789 was not included in the SEFA for the year ended June 30, 2024. The Organization did not have sufficient controls to ensure the SEFA included all expenditures that qualified as an expenditure of a federal award during the period. Cause and Effect: At the time the PATH CITED program was implemented and expenditures were incurred during fiscal year 2023, the grant agreements and publicly available documentation from the California Department of Health Care Services (DHCS) did not identify the funding as federal passthrough assistance and did not include the related Assistance Listing Number or other federal award identification elements typically required under Uniform Guidance. Based on the information available at that time, the Organization did not identify the PATH CITED program as federal funding subject to SEFA reporting requirements and reasonably treated the funding as non-federal. As a result, total expenditures of Federal awards were understated for the year ended June 30, 2024 by $2,692,789. During audit procedures over expenditures of federal awards for the year ended June 30, 2025, DHCS provided the Organization’s management with information that the PATH CITED program expenditures contained Federal awards. Management has restated the 2024 SEFA to include $2,692,789 PATH CITED expenditures for the year ended June 30, 2024. Questioned costs: $0 Repeat Finding: Yes, Finding Number 2023-001. Recommendation: We recommend management strengthen existing policies and procedures and improve the effectiveness of related internal controls to confirm existence of federal assistance within all contracts, and strengthen the existing periodic review throughout the year to ensure compliance with SEFA reporting requirements as outlined in the Uniform Guidance. Views of Responsible Officials and Planned Corrective Action: Management acknowledges the omission of PATH CITED expenditures from the SEFA for the year ended June 30, 2024. Management notes that the federal nature of the PATH CITED program was not identified in the original grant documentation or publicly available information provided by DHCS at the time the funding was awarded. Upon confirmation in 2025 that the program includes federal pass-through funding, the Organization worked to restate the SEFA and include the appropriate federal expenditures.
Finding 2024-002: Preparation of the Schedule of Expenditures of Federal Awards (SEFA) Condition At the beginning of the audit, Home Start, Inc. did not provide a properly completed Schedule of Expenditures of Federal Awards (SEFA). Certain programs administered by the Organization were funded through a combination of federal and non-federal sources. The Organization had not identified the portion of expenditures attributable to federal awards prior to the commencement of audit fieldwork. As a result, the identification of federal expenditures and the amounts to be included in the SEFA occurred during the audit process rather than prior to the start of the audit. This resulted in delays in determining the complete population of federal expenditures and the programs subject to audit under the Uniform Guidance. Criteria Under 2 CFR §200.510(b) of the Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), auditees are responsible for preparing a Schedule of Expenditures of Federal Awards for the period covered by the financial statements. The SEFA must accurately present total federal expenditures for each federal program, including the Assistance Listing number and pass-through identifying information, where applicable. Cause The Organization does not have a formalized process to identify and track the federal portion of expenditures for programs funded through multiple sources during the fiscal year. As a result, management had not compiled or finalized the SEFA prior to the start of the audit. Effect The absence of a completed SEFA at the commencement of the audit delayed the auditor’s ability to determine the population of federal expenditures and identify major programs for testing under the Uniform Guidance. This resulted in additional time required during fieldwork to determine the appropriate amounts to include in the SEFA. Recommendation We recommend that management implement procedures to identify and track federal expenditures by Assistance Listing number throughout the year, particularly for programs with mixed funding sources. Management should prepare and review a complete and accurate SEFA prior to the start of the audit, including identification of federal funding components within blended funding streams. Establishing formal procedures for the preparation and review of the SEFA will help ensure compliance with 2 CFR §200.510(b) and support timely completion of the annual Single Audit.
Internal Control over Compliance and Compliance with Reporting (Preparation of the Schedule of Expenditures of Federal Awards (SEFA)) ALN: 93.866, Aging Research: The Role of Methylation-Sensitive PP2A Isoforms in Regulating the Pathological Response to Tau ALN: 21.027, COVID-19 Coronavirus State and Local Fiscal Recovery Fund, American Rescue Plan Act (ARPA) Criteria: The Code of Federal Regulations (CFR) Section 200.510(b) states in part: The auditee must also prepare a schedule of expenditures of Federal awards for the period covered by the auditee’s financial statements which must include the total Federal awards expended as determined in accordance with CFR Section 200.502 Basis for determining Federal awards expended. The schedule must provide total Federal awards expended for each individual Federal program. CFR 200.302(b)(1) requires the nonfederal entity to identify in its accounts and on the schedule of expenditures of federal awards all federal awards received and expended, as well as the federal programs under which they were received. Federal program and award identification must include, as applicable, the Assistance Listing program title and number, the federal award identification number and year, the name of the federal agency, and the name of the pass-through entity, if any. Condition: The Role of Methylation-Sensitive PP2A Isoforms in Regulating the Pathological Response to Tau grant included amounts that were not Federal expenditures. Investigating the Role of Long-Term Latent Herpes Simplex Virus Infection on APOE4-Associated Alzheimer’s Disease Pathogenesis Grant and COVID-19 Coronavirus State and Local Fiscal Recovery Fund, American Rescue Plan Act (ARPA) grant were left off the prepared SEFA. Context: The SEFA was understated or overstated by ALN as follows: • Overstated by $12,757 for The Role of Methylation-Sensitive PPA Isoforms in Regulating the Pathological Response to Tau grant; and • Understated by $150,000 for the omission of COVID-19 Coronavirus State and Local Fiscal Recovery Fund, American Rescue Plan Act (ARPA) grant. Effect: The SEFA provided was not complete and accurate. Questioned Costs: None. Cause: The overstated grant amount of $12,757 was a misinterpretation of contract costs being included as Federal Expenditures after the grant had ended. The omission of $150,000 was a misinterpretation of the Federal source of the grant. Recommendation: We recommend McLaughlin Research Institute for Biomedical Sciences, Inc. strengthen internal controls over the preparation of the SEFA by having staff familiar with the federal funds review the prepared SEFA for completeness and accuracy prior to providing it to the auditor.
2024-006 - Preparation of the Schedule of Expenditures of Federal Awards Finding Type: Material weakness in internal control over compliance. Criteria: The Uniform Guidance (2 CFR 200.302 and 2 CFR 200.510(b)) requires that non-Federal entities maintain records that adequately identify the source and application of Federal awards and prepare a Schedule of Expenditures of Federal Awards (SEFA) that is complete and accurate. Condition: The City did not prepare a Schedule of Expenditures of Federal Awards (SEFA) for the fiscal year ended June 30, 2024. A complete and accurate SEFA was prepared by the external auditor during the audit process. Cause: This condition is the result of the City’s lack of procedures and internal controls to identify, track, and report Federal award activity necessary to prepare the SEFA. Effect: As a result of this condition, the City did not maintain adequate internal control over compliance related to Federal reporting requirements and was not able to ensure that all Federal expenditures were identified and reported in accordance with Uniform Guidance. Recommendation: The City should implement procedures to identify and track Federal awards and expenditures and prepare a complete and accurate SEFA in accordance with Uniform Guidance requirements. Management Response: See Corrective Action Plan.
Finding 2024-002 – Untimely and Inaccurate Preparation of the Schedule of Federal Awards (SEFA) (Sig-nificant Deficiency) Financial Reporting / Internal Control Over Compliance CFDA Title and Number: 97.036 Public Assistance Program – Disaster Grants Name of Federal Agency: Federal Emergency Management Agency (FEMA Internal Control over Compliance: Skills Knowledge and Education (SK&E) CFDA Title and Number: 66.202 Wastewater Treatment Plant Name of Federal Agency: U. S. Environmental Protection Agency Internal Control over Compliance: Skills Knowledge and Education (SK&E) Criteria: The Uniform Guidance (2 CFR §200.510(b)), requires the auditee to prepare a Schedule of Federal Ex-penditures of Federal Awards (SEFA) that accurately reports federal expenditures for each federal award, including the Assistance Listing number, federal agency, pass-through entity (if any), and amount expended for the fiscal year. In addition, (2 CFR §200.302(b)), requires financial management systems that provide for accurate, current, and complete disclosure of federal award expenditures and support reliable financial reporting and reconciled to the general ledger. Condition: The auditee did not timely or accurately prepare the Schedule of Expenditures of Federal Awards. Specifically: • The initial SEFA provided to auditors was significantly later than the requested date, and required signifi-cant auditor inquiry and assistance to complete. • Management did not demonstrate an understanding of the dates and amounts of federal expenditures to be reported on the SEFA. • The SEFA provided to auditors did not include all federal awards. • Required Assistance Listing numbers were not included for federal programs. • The format of the SEFA was not easily reconcilable to the general ledger, and required auditor-identified corrections and adjustments in order to fairly present federal expenditures in accordance with federal re-quirements. Cause: The condition resulted from: • An insufficient understanding of SEFA preparation requirements, including which expenditures to report and how federal awards should be presented; and • Inadequate internal controls over the preparation, review, and reconciliation of the SEFA to the accounting records. Effect or Potential Effect: As a result of these conditions: • There was an increased risk that federal expenditures were incomplete, inaccurate, or improperly reported. • Management’s ability to determine total federal expenditures, for the fiscal year, including evaluation of Single Audit applicability, was impaired. • The entity relied on auditor assistance to identify omitted awards, reconcile amounts and bring the SEFA into compliance with federal reporting requirements, indicating a lack of effective internal controls over federal financial reporting. Questioned Cost: None noted here. Repeat of a Prior-Year Finding: No Recommendation: We recommend the entity strengthen its internal controls over federal financial reporting by: • Developing and documenting procedures for the timely preparation of the SEFA, including identification of all federal awards, correct Assistance Listing numbers, and determination of reportable expenditures. • Establish a process to reconcile the SEFA to the general ledger and to supporting records to ensure com-pleteness and accuracy. • Providing training to appropriate personnel regarding Uniform Guidance SEFA requirements and the de-termination of federal expenditures for reporting and audit threshold purposes. • Establish cutoff procedures to capture year-end accruals/deferred items and ensure completeness of ex-penditures for the SEFA. Views of Responsible Officials: Port of Brookings Harbor acknowledges this finding. Management recognizes that it did not fully understand SEFA reporting requirements. Management is committed to enhancing its under-standing of federal reporting requirements and strengthening internal controls to ensure future SEFA’s are prepared accurately, completely, and in a timely manner. Corrective Action Plan: _________________________ (To be developed by Port of Brookings Harbor and sub-mitted for final report) Planned Implementation Date: ________________ Responsible Persons: District Financial Management, Port of Brookings Harbor
FINDING REFERENCE NUMBER 2024-035 (See Finding Reference Number 2024-014) 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 INTERNAL CONTROL AND COMPLIANCE – 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 PRDF, we noted significant deficiencies related to the schedule preparation as follows: • The expenditures for some Federal programs were not accurately reported. To reconcile amounts in the SEFA with the audited financial accounts, the PRDF agree with the suggested auditor adjustments and posted them to the SEFA. • The PRDF Management does not have an adequate internal control system in place to quickly detect and accurately document the expenditures incurred under each Federal programs. This situation led to delays and errors in the preparation of the schedule and the amounts initially submitted for the SEFA. • The initial SEFA submitted for audit procedures contained the following deficiencies because of inadequate internal controls: o There are no safeguards in place to keep an accurate and comprehensive list of Notice of Agreements (NOAs). As a result, the different versions of the SEFA that were received contain incorrect and incomplete information. o Expenditures related to COVID-19 appropriations for different Federal programs were not separately disclosed in the SEFA. For ALN 14.231 the amount of $3,119,131.54 was not separately presented, in addition for ALN 93.671 the distribution between COVID and regular funds was incorrectly presented by $2,075,855.34. o For ALN 93.558 expenditures were included that do not correspond to the program as follows: a total amount of $20,364,480 of programs expenditures correspond to ALN 93.560 and a total amount of $9,140,245.62 corresponds to ALN 93.667. The incorrect presentation of these amounts could affect the correct identification of the programs as Type A and Type B for major program determination. o For ALN 93.671 a total amount of $712,602.44 were included as program expenditure but those expenditures correspond to ALN 93.497. o During the fiscal year, reimbursements of expenses incurred related to ALN 97.036 were received in the amount of $2,828,481.01; however, for the initial SEFA submitted, no validation was performed on the amount of expenses of those reimbursements that should be included in the schedule. After the validation is completed, all the amounts should be included in the schedule as expenditure. PERSPECTIVE INFORMATION This is a systemic deficiency. The PRDF was unable to provide an accurate Schedule of Expenditures of Federal Awards (SEFA), and related supporting documentation in order to apply required audit procedures. The PRDF is composed of five (5) Administrations that manage federal funds. The Office of Secretariat is responsible for coordinating the work of the administrations, but there are no established procedures for coordinating the collection of information when preparing the SEFA for audit purposes. STATEMENT OF CAUSE The PRDF does not have an adequate procedure established to collect, organize, and validate the information necessary for the preparation of the SEFA in accordance with Federal regulations. POSSIBLE ASSERTED EFFECT The PRDF may fail to include all Federal programs and total expenditures in the SEFA causing misstatements in the SEFA submitted to Auditors. It also leads to inaccurate Major Program Determination multiple times made by the auditors because of the different versions of the SEFA submitted, affecting the execution of the Single Audit in a reasonable time. IDENTIFICATION OF REPEAT FINDING This is a repeat of a finding reported in the prior audit as Finding Numbers 2023-019/2023-047. RECOMMENDATIONS We recommend the PRDF establish adequate procedures to coordinate the collection, organization, and validation of the required information to prepare the SEFA from each of the Administrations in a timely manner to ensure that all Federal programs/transactions are properly recorded and included in the schedule.
Inaccurate Grant Reporting (Material Weakness) Assistance Listing: 10.766 Federal Program: Community Facilities Loans and Grants Condition: During our audit, the City did not identify and report federal expenditures related to Community Facilities Loans and Grants (Assistance Listing 10.766) on the originally issued SEFA for the year ended June 30, 2024. As a result, the SEFA did not include the expenditures associated with Assistance Listing 10.766, which affected the completeness of the SEFA and the related major program determination. The underlying loan and loan activity were properly recorded and disclosed in the basic financial statements. The deficiency was limited to the identification and reporting of the federal award on the SEFA, which in turn affected major program determination for single-audit purposes. Criteria: In accordance with 2 CFR §200.510(b) and 2 CFR §200.518, the City is responsible for preparing a complete and accurate SEFA that includes all federal awards expended during the fiscal year, including loan programs, and for identifying federal programs and determining which programs are major for purposes of the Uniform Guidance single audit. Cause: Management’s SEFA preparation and review procedures were not sufficiently designed and/or operating effectively to: 1) identify all federal programs and Assistance Listings applicable to the City’s activities, including loan programs; and 2) ensure amounts recorded in the general ledger and related financial statement balances were appropriately evaluated for federal award classification and SEFA inclusion (including evaluating whether activity recorded as loans payable/receivable or related loan activity represented federal awards expended for SEFA reporting). Effect: The omission of Assistance Listing 10.766 from the originally issued SEFA caused: 1) total federal expenditures reported on the SEFA to be understated; and 2) an error in the identification and reporting of the City’s federal award activity, which could affect the auditor’s understanding of the City’s federal award universe and the overall major program risk assessment and determination under Uniform Guidance. Questioned Cost: None Repeat Finding: Yes Recommendation: We recommend that the City strengthen internal control over compliance related to SEFA preparation and Uniform Guidance single-audit reporting by implementing procedures to ensure all federal programs are identified and properly reported on the SEFA, including loan programs. Such procedures should include at a minimum: 1) maintaining a complete listing of all federal programs (by Assistance Listing, awarding agency/pass-through entity, and award/loan identifiers) applicable to the fiscal year; 2) performing a formal annual SEFA planning process that includes inquiry of finance and program personnel and review of grant/loan agreements and communications from federal/pass-through entities to identify all federal awards; 3) incorporating targeted procedures to identify federal loan programs and related expenditures/loan balances that must be included on the SEFA, including reconciliation of loan activity and balances to SEFA amounts and required SEFA disclosures; and 4) performing an independent review of the draft SEFA and the major program determination to confirm completeness and accuracy prior to issuance. Response: The City will strengthen internal controls over SEFA identification and preparation to ensure compliance with Uniform Guidance single-audit requirements. The City will also implement enhanced review and communication procedures with external auditors, as the condition was significantly impacted by deficiencies in the auditors’ evaluation and classification of major programs during the audit process.
Finding 2024-004 – Inadequate Schedule of Expenditures of Federal Awards (SEFA) (Material Weakness) Federal Program: 21.027 American Rescue Plan - ARPA Name of Federal Agency: U.S. Department of Treasury Compliance/Internal Control over Compliance: Auditee Responsibilities Criteria: CFR §200.508, CFR Part 200.510, requires that the auditee prepare a Schedule of Expenditures of Fed-eral Awards (SEFA) for the period covered by the entity’s financial statements. The SEFA must include, at a min-imum, the total Federal awards expended by Federal agency, pass-through entity, Assistance Listing (AL) number, and other required identifying information. The SEFA must be complete, accurate, and reconcile to the underlying accounting records. Condition: During the audit, we noted that the SEFA prepared by the organization was incomplete, and inaccu-rate. Specifically, federal revenue amounts were shown instead of expenditures, and not all Federal awards were listed and amounts shown were not reconciled to the underlying accounting records. In addition, Grant funds were drawn (requested and received) for the same underlying expenditures in two different fiscal years, resulting in du-plicate reimbursement. Cause: The inaccuracies appear to be due to inadequate procedures and controls over the identification, tracking, and reporting of federal awards. Management did not implement a formal process to compile and review SEFA information for completeness and accuracy. Effect: An inaccurate or incomplete SEFA increases the risk of noncompliance with federal reporting requirements and may result in misreporting of major programs, affecting the audit process. It also increases the risk of missed audit coverage for major programs. Questioned Cost: None noted. Context: The auditee did not provide a complete and accurate SEFA that included all federal expenditures that reconciled to the general ledger for Federal Awards, and did not list all federal awards. Specifically: • Management did not initially provide a SEFA for the audit period, it was not provided until late in the au-dit process. • During the audit procedures, the auditor identified additional federal expenditures that were not provided by the client, and not included in the original SEFA. • The SEFA submitted by management contained material errors, including incorrect expenditures amounts (revenues instead of expenditures), and inconsistencies with the general ledger (grant revenues from prior year expenditures included as expenditures again). • The SEFA required multiple revisions and significant auditor assistance due to incomplete data and report-ing errors. This condition demonstrates that management did not have sufficient processes in place to identify, accumulate, and report federal expenditures, and did not provide accurate information for the SEFA preparation. Repeat of a Prior-Year Finding: No, prior year did not require a Single Audit. Recommendation: We recommend that The Town of Lakeview establish policies and procedures to ensure that all Federal awards are identified and reported accurately on the SEFA. Internal controls should be designed to pre-vent, 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 Town of Lakeview should provide appropriate training to staff who are assigned to prepare and review the SEFA. Client's Response: The Town of Lakeview concurs with the recommendation and will work through the Correc-tive Action Plan to improve or solve the deficiency. Corrective Action Plan: __________________To be developed by Town of Lakeview. Planned Implementation Date: In progress. Responsible Person: Town of Lakeview Mayor.
Finding 2024-002: Preparation of the Schedule of Expenditures of Federal Awards Material weakness/other matter noncompliance Federal Agency: U.S. Department of Education Pass-through Agency: Illinois State Board of Education Program Name: Education Stabilization Fund: COVID-19: American Rescue Plan - Elementary and Secondary School Emergency Relief ALN Number: 84.425 Award Number: 24-4998-E3 Award Year: 2024 Criteria: The Uniform Guidance (2 CFR 200.510b) requires that the auditee must prepare a Schedule of Expenditures of Federal Awards (SEFA) for the period covered by its financial statements which must include the total Federal Awards expended as determined in accordance with 2 CFR 200.502. Condition: The SEFA for the year ended June 30, 2024 excluded $2,592,649 in expenditures incurred for the Education Stabilization Fund: COVID-19: American Rescue Plan - Elementary and Secondary School Emergency Relief federal program (ALN 84.425U). Cause: The existing internal control procedures for reviewing amounts on the SEFA failed to detect an incorrect amount was reported for the program. While a process is in place, the final review failed to detect the error. Effect: The SEFA was materially misstated. Also, lack of a robust review process could result in misstatements in future years. Context: As a result of the omission of eligible expenditures, total federal awards and amounts for ALN 84.425, COVID-19: Education Stabilization Fund were understated by $2,592,649 due to the use of the cash draw amount instead of program expenditures. This understatement did not impact the major program determination. Question Costs: None Repeat Finding: No Recommendation: We recommend the District thoroughly review the schedule of expenditures of federal awards prior to issuance. Views of responsible officials: Management will review its year-end processes and its grant-related internal controls with a specific focus on accrual-basis auditing requirements to ensure that such errors do not occur in the future.
Finding No: 2024-101 Strengthen controls for capturing and reporting transactions on the SEFA State Agency: Oklahoma Department of Health Federal Agency: United States Department of Health and Human Services Assistance Listing Number: 10.557 Federal Program Name: Special Supplemental Nutrition Program for Women, Infants, and Children (WIC) Federal Award Number: 6OK700505 Federal Award Year: 2023, 2024 Compliance Category: Reporting Questioned Costs: Unknown Criteria: The Schedule of Expenditures of Federal Awards (SEFA – GAAP Package Schedule Z) should be accurately captured, reconciled, and reviewed by the Oklahoma State Department of Health (the “Department”). Adequate documentation of procedures performed, as well as evidence of thorough reviews, should be in place. According to GAAP, expenditures should be recognized in the period services are performed or goods are received. In accordance with the modified accrual basis of accounting, federal grant revenues should be recognized when applicable eligibility requirements, including reimbursement, time requirements, and other eligibility requirements, are met and the resources are available. Revenues are considered available when they are collectible within the current period or soon enough thereafter to pay liabilities of the current period. In accordance with the State of Oklahoma’s Annual Comprehensive Financial Report, the State considers revenues to be available if they are collected within sixty days of the end of the fiscal year. Lastly, the Uniform Guidance (2 CFR 200.510) requires an auditee to “prepare a schedule of expenditures of Federal awards (SEFA) for the period covered by the auditee’s financial statement [that] … at a minimum shall … list individual Federal programs by Federal agency … [and] provide total Federal awards expended for each individual Federal program … [and] include the total amount provided to subrecipients for each Federal program.” In accordance with Uniform Guidance, the Department is required to maintain a structure of internal control to ensure compliance with applicable reporting requirements. Furthermore, the State of Oklahoma’s Schedule Z SEFA Conversion Package states, “The amount reported as provided by the primary recipient to state agencies should be entered in the ‘Amount Transferred to State Agencies’ column. This amount should be included in the Federal revenue but not in expense columns of the primary recipient.” The Government Accountability Office (GAO) Standards for Internal Control in the Federal Government 10.03 states, in part, “Management designs appropriate types of control activities for the entity’s internal control system. Control activities help management fulfill responsibilities and address identified risk responses in the internal control system.” Additionally, GAO Standards for Internal Control in the Federal Government 10.03 states, in part, “Transactions are promptly recorded to maintain their relevance and value to management in controlling operations and making decisions. This applies to the entire process or life cycle of a transaction or event from its initiation and authorization through its final classification in summary records. In addition, management designs control activities so that all transactions are completely and accurately recorded.” Condition: The Department was unable to provide support that recorded transactions agree to the federal revenues reported in Schedule Z. Cause and Effect: The Department does not have appropriate internal procedures for capturing and reporting the federal expenditures and revenues on the SEFA in accordance with the Uniform Guidance (2 CFR 200200.510). Revenues are recorded by the Department on a cash basis and deposits are not recorded in the general ledger (GL) with a unique identifier to indicate which fiscal year in which the matching expenditures reside. Also, batched cash deposits containing sources of revenues from differing fiscal years cannot be appropriately allocated to the year in which the revenue was earned. Batched deposits are recorded as a single GL transaction regardless of the year in which the related deposit was earned and contain revenues for which the related expenditures were recorded in differing fiscal years. As a result, the Department’s GL does not possess sufficient detail to accurately account for the required modified accrual basis conversions. The Department has not ensured that the transactional data recorded provides enough detail to accurately report the federal activity in Schedule Z. Recommendation: We recommend the Department review and document the current procedures and implement the necessary changes to ensure adequate reporting of program financial information in the SEFA. Specifically, we recommend the Department continue to review its cash reporting and decipher batch deposits by fiscal year, with a unique identifier recorded at the GL transaction level. Additionally, we recommend retaining evidence that adequate reviews of the SEFA occurred. We also recommend the Department establish procedures to timely reconcile federal revenues to its federal expenditures to ensure completeness of its related federal reporting. Views of Responsible Official(s) Contact Person: Ryon Fields, Interim CFO Anticipated Completion Date: 6/30/26 Management Response: The Oklahoma State Department of Health agrees with the finding. Please see the corrective action plan located in the corrective action plan section of this report.
FINDING NO: 2024-039 (Repeat 2023-056) Strengthen Internal Controls Over SEFA Reconciliations STATE AGENCY: State of Oklahoma and Office of Management and Enterprise Services (OMES) FEDERAL AGENCY: U.S. Department of the Treasury ALN: 21.027 FEDERAL PROGRAM NAME: Coronavirus State And Local Fiscal Recovery Funds (CSLFRF) FEDERAL AWARD NUMBER: N/A FEDERAL AWARD YEAR: 2024 CONTROL CATEGORY: Reporting QUESTIONED COSTS: $0 Condition and Context: The State of Oklahoma had twenty-two (22) state agencies report CSLFRF expenditures on the Schedule of Expenditures of Federal Awards (SEFA) for SFY 2024. The state created class fund 488 (ARPA Advance Grants) for administrative costs to run the grant, and class fund 497 (Statewide Recovery Fund) to facilitate the transfer of CSLFRF funds to agencies. Class fund 488 only applies to State of Oklahoma OMES - Grants Management Office (GMO) and class fund 497 applies to all agencies. For the thirteen (13) state agencies audited by the State Auditor’s Office, we noted the following SEFA exceptions: • Three agencies (055, 060, 585) did not include, but should have reported expenditures for, AL #21.027 CSLFRF on their SEFA • Five agencies (452, 670, 800, 830, 835) included AL #21.027 CSLFRF on their SEFA but did not accurately report their expenditures Based on testwork performed by the State Auditor’s Office on CSLFRF state agency SEFA expenditures for SFY 2024, we determined the state agencies reported $126,453,915 in modified accrual expenditures; and the correct SEFA total should have been $132,349,844. Further, when including outside audits of state agency CSLFRF funds, we determined total modified accrual federal expenditures reported were $174,998,951; however, the correct CSLFRF SEFA total for SFY 2024 should have been $180,894,880. Cause: The State of Oklahoma had no controls in place to ensure a SEFA was completed for each agency receiving CSLFRF funds. State agencies (055, 060, 452, 585, 670, 800, 830, 835) lacked adequate controls to ensure SEFA expenditures for AL #21.027 were reported correctly. State agencies (055, 060, 452, 585, 670, 800, 830) did not review the Summary of Receipts and Disbursements (SRD) report for class fund 497 (Statewide Recovery Fund) to ensure all federal expenditures were included on their SEFA. State agency (835) recorded cash transfers erroneously as expenditures. Cash transfers of $167,173,545 were erroneously recorded as total modified accrual expenditures on the SEFA. We were able to support $46,452,859 of actual expenditures incurred during the period; therefore, we determined this to only be a control deficiency. However, the agency did overstate their actual SEFA expenditures by $711,718 by recording expenditures in SFY 2024, that should have been recorded in the prior year. This overstatement was a part of the overall SEFA variance listed in the Effect below. Effect: The State of Oklahoma under-reported SEFA expenditures by $5,895,929 for SFY 2024. Recommendation: We recommend OMES ensure that state agencies strengthen controls over their SEFA process to ensure accurate reporting of CSLFRF expenditures, including a review of the SRD for class fund 497. Further, we recommend the State of Oklahoma review the SRD for class fund 497 for the agencies that transferred CSLFRF funds to ensure those with expenditures complete a SEFA. In addition, we recommend the State of Oklahoma reconcile state agency SEFAs to the SRD for class fund 497 to ensure expenditures are reported accurately. Lastly, for agency 835, we recommend all expenditures be recognized in the period the liability is incurred. Criteria: Per 2 CFR § 200.303, “The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award.” 2 CFR § 200.502(a) states in part, “Determining Federal awards expended. The determination of when a Federal award is expended must be based on when the activity related to the Federal award occurs.” 2 CFR § 200.510(b) states in part, “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. The schedule must include the total Federal awards expended as determined in accordance with §200.502. … (3) Provide total Federal awards expended for each individual Federal program and the Assistance Listings Number or other identifying number when the Assistance Listings information is not available.” Management Response Contact Person: OMES: Elizabeth Base; 055: April Kowardy; 060: Chris Wadsworth; 452: Chad Carden; 585: Brittany Stroud; 670: Erik Paulson & Darrell Green; 800: Lisa Batchelder; 830: Lindsey Kanaly; 835: Jerri Hargis Anticipated Completion Date: Completed Corrective Action Planned: The Office of Management Enterprise Services – Grants Management Office agrees with the finding. Please see the corrective action plan located in the corrective action plan section of this report.
Finding No: 2024-102 (Repeat 2023-206) Strengthen controls for capturing and reporting transactions on the SEFA State Agency: Oklahoma Department of Health Federal Agency: United States Department of Health and Human Services Assistance Listing Number: 93.268 Federal Program Name: Immunizations Cooperative Agreements Federal Award Number: NH23IP922575-01-02, NH23IP922575-02-00, NH23IP922575-02-06, NH23IP922575- 03-00, NH23IP922575-04-00, NH23IP922575-05-06, NH23IP922575-05-13 Federal Award Year: 2021, 2022, 2023, 2024 Compliance Category: Reporting Questioned Costs: Unknown Criteria: The Schedule of Expenditures of Federal Awards (SEFA – GAAP Package Schedule Z) should be accurately captured, reconciled, and reviewed by the Oklahoma State Department of Health (the “Department”). Adequate documentation of procedures performed, as well as evidence of thorough reviews, should be in place. According to GAAP, expenditures should be recognized in the period services are performed or goods are received. In accordance with the modified accrual basis of accounting, federal grant revenues should be recognized when applicable eligibility requirements, including reimbursement, time requirements, and other eligibility requirements, are met and the resources are available. Revenues are considered available when they are collectible within the current period or soon enough thereafter to pay liabilities of the current period. In accordance with the State of Oklahoma’s Annual Comprehensive Financial Report, the State considers revenues to be available if they are collected within sixty days of the end of the fiscal year. Lastly, the Uniform Guidance (2 CFR 200.510) requires an auditee to “prepare a schedule of expenditures of Federal awards (SEFA) for the period covered by the auditee’s financial statement [that] … at a minimum shall … list individual Federal programs by Federal agency … [and] provide total Federal awards expended for each individual Federal program … [and] include the total amount provided to subrecipients for each Federal program.” In accordance with Uniform Guidance, the Department is required to maintain a structure of internal control to ensure compliance with applicable reporting requirements. Furthermore, the State of Oklahoma’s Schedule Z SEFA Conversion Package states, “The amount reported as provided by the primary recipient to state agencies should be entered in the ‘Amount Transferred to State Agencies’ column. This amount should be included in the Federal revenue but not in expense columns of the primary recipient.” The Government Accountability Office (GAO) Standards for Internal Control in the Federal Government 10.03 states, in part, “Management designs appropriate types of control activities for the entity’s internal control system. Control activities help management fulfill responsibilities and address identified risk responses in the internal control system.” Additionally, GAO Standards for Internal Control in the Federal Government 10.03 states, in part, “Transactions are promptly recorded to maintain their relevance and value to management in controlling operations and making decisions. This applies to the entire process or life cycle of a transaction or event from its initiation and authorization through its final classification in summary records. In addition, management designs control activities so that all transactions are completely and accurately recorded.” Condition: The Department was unable to provide support that record transactions agree to the federal revenues reported in Schedule Z. Cause and Effect: The Department does not have appropriate internal procedures for capturing and reporting the federal expenditures and revenues on the SEFA in accordance with the Uniform Guidance (2 CFR 200.510). Revenues are recorded by the department on a cash basis and deposits are not recorded in the general ledger (GL) with a unique identifier to indicate which fiscal year in which the matching expenditures reside. Also, batched cash deposits containing sources of revenues from differing fiscal years cannot be appropriately allocated to the year in which the revenue was earned. Batched deposits are recorded as a single GL transaction regardless of the year in which the related deposit was earned and contain revenues for which the related expenditures were recorded in differing fiscal years. As a result, the Department’s GL does not possess sufficient detail to accurately account for the required modified accrual basis conversions. The Department has not ensured that the transactional data recorded provides enough detail to accurately report the federal activity in Schedule Z. Recommendation: We recommend the Department review and document the current procedures and implement the necessary changes to ensure adequate reporting of program financial information in the SEFA. Specifically, we recommend the Department continue to review its cash reporting and decipher batch deposits by fiscal year, with a unique identifier recorded at the GL transaction level. Additionally, we recommend retaining evidence that adequate reviews of the SEFA occurred. We also recommend the Department establish procedures to timely reconcile federal revenues to its federal expenditures to ensure completeness of its related federal reporting. Views of Responsible Official(s) Contact Person: Ryon Fields, Interim CFO Anticipated Completion Date: 6/30/26 Management Response: The Oklahoma State Department of Health agrees with the finding. Please see the corrective action plan located in the corrective action plan section of this report.
Finding No: 2024-103 (Repeat 2023-207) Strengthen controls for capturing and reporting transactions on the SEFA State Agency: Oklahoma Department of Health Federal Agency: United States Department of Health and Human Services Assistance Listing Number: 93.323 Federal Program Name: Epidemiology and Laboratory Capacity for Infectious Diseases Federal Award Numbers: NU50CK000535-01-11, NU50CK000535-02-03, NU50CK000535-02-06, NU50CK000535-03-00, NU50CK000535-03-01, NU50CK000535-03-02, NU50CK000535-04-00, NU50CK000535-05-00, NU50CK000535-05-07, NU50CK000535-05-08, NU50CK000535-05-12 Federal Award Year: 2020, 2021, 2022, 2023, 2024 Compliance Category: Reporting Questioned Costs: Unknown Criteria: The Schedule of Expenditures of Federal Awards (SEFA – GAAP Package Schedule Z) should be accurately captured, reconciled, and reviewed by the Oklahoma State Department of Health (the “Department”). Adequate documentation of procedures performed, as well as evidence of thorough reviews, should be in place. According to GAAP, expenditures should be recognized in the period services are performed or goods are received. In accordance with the modified accrual basis of accounting, federal grant revenues should be recognized when applicable eligibility requirements, including reimbursement, time requirements, and other eligibility requirements, are met and the resources are available. Revenues are considered available when they are collectible within the current period or soon enough thereafter to pay liabilities of the current period. In accordance with the State of Oklahoma’s Annual Comprehensive Financial Report, the State considers revenues to be available if they are collected within sixty days of the end of the fiscal year. Lastly, the Uniform Guidance (2 CFR 200.510) requires an auditee to “prepare a schedule of expenditures of Federal awards (SEFA) for the period covered by the auditee’s financial statement [that] … at a minimum shall … list individual Federal programs by Federal agency … [and] provide total Federal awards expended for each individual Federal program… [and] include the total amount provided to subrecipients for each Federal program” In accordance with Uniform Guidance, the Department is required to maintain a structure of internal control to ensure compliance with applicable reporting requirements. Furthermore, the State of Oklahoma’s Schedule Z SEFA Conversion Package states, “The amount reported as provided by the primary recipient to state agencies should be entered in the ‘Amount Transferred to State Agencies’ column. This amount should be included in the Federal revenue but not in expense columns of the primary recipient.” The Government Accountability Office (GAO) Standards for Internal Control in the Federal Government 10.03 states, in part, “Management designs appropriate types of control activities for the entity’s internal control system. Control activities help management fulfill responsibilities and address identified risk responses in the internal control system.” Additionally, GAO Standards for Internal Control in the Federal Government 10.03 states, in part, “Transactions are promptly recorded to maintain their relevance and value to management in controlling operations and making decisions. This applies to the entire process or life cycle of a transaction or event from its initiation and authorization through its final classification in summary records. In addition, management designs control activities so that all transactions are completely and accurately recorded.” Condition: The Department was unable to provide support that details of record transactions agree to the federal revenues reported in Schedule Z. Cause and Effect: The Department does not have appropriate internal procedures for capturing and reporting the federal expenditures and revenues on the SEFA in accordance with the Uniform Guidance (2 CFR 200.510). Revenues are recorded by the Department on a cash basis and deposits are not recorded in the general ledger (GL) with a unique identifier to indicate which fiscal year in which the matching expenditures reside. Also, batched cash deposits containing sources of revenues from differing fiscal years cannot be appropriately allocated to the year in which the revenue was earned. Batched deposits are recorded as a single GL transaction regardless of the year in which the related deposit was earned and contain revenues for which the related expenditures were recorded in differing fiscal years. As a result, the Department’s GL does not possess sufficient detail to accurately account for the required modified accrual basis conversions. The Department has not ensured that the transactional data recorded provides enough detail to accurately report the federal activity in Schedule Z. Recommendation: We recommend the Department review and document the current procedures and implement the necessary changes to ensure adequate reporting of program financial information in the SEFA. Specifically, we recommend the Department continue to review its cash reporting and decipher batch deposits by fiscal year, with a unique identifier recorded at the GL transaction level. Additionally, we recommend retaining evidence that adequate reviews of the SEFA occurred. We also recommend the Department establish procedures to timely reconcile federal revenues to its federal expenditures to ensure completeness of its related federal reporting. Views of Responsible Official(s) Contact Person: Ryon Fields, Interim CFO Anticipated Completion Date: 6/30/26 Management Response: The Oklahoma State Department of Health agrees with the finding. Please see the corrective action plan located in the corrective action plan section of this report.
FINDING NO: 2024-042 (Partial Repeat 2023-008 & 2023-009) Strengthen Internal Controls Over Review and Approval of the Schedule of Expenditures of Federal Awards (SEFA) STATE AGENCY: Oklahoma Health Care Authority (the Authority) FEDERAL AGENCY: United States Department of Health and Human Services ALN: 93.767; 93.778 FEDERAL PROGRAM NAME: Children’s Health Insurance Program; Medicaid Cluster FEDERAL AWARD NUMBER: 2305OK5021 and 2405OK5021; 2305OK5MAP and 2405OK5MAP FEDERAL AWARD YEAR: 2023 and 2024 CONTROL CATEGORY: Reporting QUESTIONED COSTS: $0 Condition and Context: The SEFA is required by the Office of Management and Enterprise Services (OMES) to be prepared according to instructions and forms which are contained in the GAAP Conversion Manual (OMES Form Z- 1). Based upon testwork performed on the GAAP Package Z – Schedule of Expenditures of Federal Awards, we noted the following: • The Medicaid Total Federal Expenditures were recorded at $6,768,237,101. However, based on a recording error, the Medicaid Total Federal Expenditures amount should have been $6,774,069,774. • The CHIP (Covid) Total Federal Expenditures were recorded at ($595,297). However, based on a recording error, the CHIP (Covid) Total Federal Expenditures amount should have been ($844,885). • The CHIP Total Federal Expenditures were recorded at $248,368,556. However, based on a calculation error, the CHIP Total Federal Expenditures amount should have been $239,977,890. Cause: We noted the following: • The Medicaid Total Federal Expenditures were incorrectly calculated on the “CAFR Package Z Federal Expenditures” worksheet to the GAAP Package Z. The variance occurred because the administrative portion of the Medicaid Total Federal Expenditures for the Q.E. 6/30/24 inadvertently included an amount from the prior year instead of the current year figure. • The CHIP (Covid) Total Federal Expenditures were incorrectly calculated on the “Package Z Fed Exp Rev Admin” worksheet to the GAAP Package Z. The variance occurred because the Soon-to-be-Sooners portion of the CHIP (Covid) Total Federal Expenditures for the Q.E. 12/31/23 was updated on a supporting worksheet but not carried forward to the SEFA. • The CHIP Total Federal Expenditures were incorrectly calculated on the “64.21 Totals” worksheet to the GAAP Package Z. The variance occurred because the CHIP Net Expenditures for the Q.E. 03/31/24 & 06/30/24 were not reduced by the 64.21 “Line 4 collections”. Effect: The errors on the GAAP Package Z resulted in Medicaid Total Federal Expenditures being understated by $5,832,673, CHIP (Covid) Total Federal Expenditures being overstated by $249,588 and CHIP Total Federal Expenditures being overstated by $8,390,666. Recommendation: We recommend the Authority strengthen its SEFA review and approval process to ensure the accuracy of data reported for GAAP Package Z. Criteria: 2 CFR §200.510(b) states, “The auditee must also prepare a schedule of expenditures of Federal awards for the period covered by the auditee's financial statements which must include the total Federal awards expended…” A basic objective of Generally Accepted Accounting Principles is to provide accurate and reliable information. A component objective of an effective internal control system is to ensure accurate and reliable information through a proper review and approval process. Management Response Contact Person: Calvin Cole, OHCA Director Financial Accountability & Compliance, Susan Crooke, OHCA Senior Director Accountability & Compliance Anticipated Completion Date: December 31, 2026 Corrective Action Planned: The Oklahoma Health Care Authority agrees with the finding. Please see the corrective action plan located in the corrective action plan section of this report.