Finding 1075631 (2022-001)

Finding Number: 2022-001 Program: COVID-19 Disaster Grants – Public Assistance (Presidentially Declared Disasters) Federal Agency Name: Federal Emergency Management Agency Federal Award Number: N/A Federal Award Year: 2022 Federal Assistance Listing Number: 97.036 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 (Schedule) 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 and completely reported on the Schedule. Conditions Found The District did not have adequate internal controls related to the reporting of expenditures on the Schedule for the COVID-19 Disaster Grants – Public Assistance (Presidentially Declared Disasters) program (FEMA). Specifically, the District’s review controls over the accuracy and completeness of the Schedule were not designed to operate at an appropriate level of precision for its discretely presented component unit. As a result, $1,795,854 of FEMA expenditures had been inadvertently omitted from the December 31, 2022 Schedule. Cause In discussing the conditions with District management, they stated the error was caused by the management review controls in place not operating at a sufficient level of precision to detect the error. Effect Failure to establish effective internal controls over the preparation of the Schedule may prevent the District from completing an audit in accordance with Uniform Guidance. Questioned Costs Not applicable. Statistical Sample Not applicable. Repeat Finding This finding is not a repeat finding in the immediate prior audit. Recommendation We recommend that the District implement a system of internal control that is designed and operating at a level of precision to ensure the Schedule is complete and accurate. Views of Responsible Officials The District agrees with the finding and accepts the recommendation.