Finding 1084439 (2024-001)

Condition: The Schedule of Expenditures of Federal Awards (SEFA) initially provided by the Organization was incorrect. After the errors were identified, the SEFA was adjusted to accurately report total federal awards expended. Criteria: A strong system of internal controls and management review requires that expenditures for all federal grants are accumulated and included on the SEFA in compliance with applicable standards. Cause: Internal controls over the preparation of an accurate SEFA were not properly designed and were not placed in operation. Effect: As a result of this condition, federal grant expenditures were understated by $3,920,000. The final SEFA was corrected and is properly presented. Recommendation: We recommend the Organization develop and implement a more robust system for the preparation of the SEFA for financial reporting purposes and compliance with auditee requirements identified in the Uniform Guidance. The Organization should review grant agreements and identify the proper method of reporting expenditures. Activity should reconcile to information in the accounting system as well as be reflected in the accounting system. The process should include a secondary review of the schedule by someone other than the preparer.