Finding 1061132 (2022-001)

Findings and Questioned Costs Relating to Federal Awards Finding 2022-001 – Material Weakness over SEFA Preparation Federal Agency U.S. Department of State Federal Program Overseas Refugee Assistance Program for Near East (ALN 19.519) Federal Award Year September 1, 2022 to August 31, 2023 Compliance Requirement Other – Inaccurate Reporting on the Schedule of Expenditures of Federal Awards Criteria According to 2 CFR 200.510(b), a recipient of federal awards is required to prepare a schedule of expenditures of federal awards (SEFA) for the period covered by the entity’s financial statements, which must include the federal awards expended for each federal program and the related assistance listing number (ALN). Additionally, 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 and completely reported on the Schedule. Condition and Context Save the Children Federation, Inc. and Related Entities (the Organization) did not have adequate internal controls related to the reporting of expenditures for the Overseas Refugee Assistance Program for the Near East (ALN 19.519). As a result, the amounts previously reported on the SEFA for this program for the year ended December 31, 2022 did not include $407,929 of expenditures, which were previously incorrectly reported in the Investing in People in The Middle East and North African program (ALN 19.021). These expenditures represent 12% of the total ALN 19.519 program expenditures and .08% of the total SEFA expenditures. Cause and Effect The cause was human error, whereas the ALNs are manually inputted into the Organization's system. The error was not identified when management reviewed the Schedule. Failure to establish effective internal controls regarding financial reporting for the preparation of the SEFA may prevent the entity from reporting accurate program information and completing an audit in accordance with timelines set forth by the Uniform Guidance. Questioned Costs None. Statistically Valid Sample Not applicable. Repeat Finding No Recommendation We recommend that the Organization further refine the design of the internal controls that will ensure that the ALN coding for expenditures is accurate on the SEFA. Management’s Response Management agrees with the recommendation to further refine the internal controls in the identification and reporting of ALNs in the SEFA. Once STC identified the data error, management began training to raise awareness of the importance of ALN tracking, enhance the input/verification process, add periodic quality checks, and improve the SEFA review process. The identified issue did not impact compliance with more specific award terms, conditions or allowability of expenditures and the additional ALN program included in the restatement did not lead to any different audit result.