Finding 1096661 (2024-001)

Finding 2024-001 – Material weakness over amounts reported on the Schedule of Expenditures of Federal Awards (SEFA) Identification of the federal program: Federal Granting Agency: U.S. Department of Homeland Security, Federal Emergency Management Agency (FEMA) Award Name: COVID-19 – Disaster Grants – Public Assistance (Presidentially Declared Disasters) Assistance Listing Number: 97.036 Pass-through entity: Vermont Department of Public Safety and New York State Division of Homeland Security and Emergency Services Criteria or specific requirement: 2 CFR Section 200.303 of the Uniform Guidance states the following regarding internal control: “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).” Condition: The preliminary fiscal year 2024 expenditures reported on the schedule of expenditures of federal awards (SEFA) for the COVID-19 Disaster Grants – Public Assistance (Presidentially Declared Disasters) program (Disaster Grants program) incorrectly excluded Disaster Grants program funding that was obligated by FEMA during fiscal year 2024. Cause: Management did not have effective internal controls in place to ensure accurate reporting of the obligated funds for the Disaster Grants program. Effect or potential effect: Certain obligated amounts were incorrectly reported in the preliminary SEFA for the year ended September 30, 2024. Questioned costs: None. The updated SEFA, as presented in this report, was adjusted for the item noted in the Context section below. Context: Certain obligated amounts were incorrectly reported in the preliminary SEFA for the year ended September 30, 2024. After commencement of the Uniform Guidance audit procedures, adjustments of $18,199,589 were made to correctly report the SEFA amounts related to the Disaster Grants program. Identification as a repeat finding, if applicable: No. Recommendation: Management should reassess its internal controls over the review and approval process of the SEFA preparation. Views of responsible officials: Management has updated internal controls for the review and approval of the SEFA. Outlier projects (unique grant projects that aren’t recorded in the grant recording system) are reviewed for Uniform Guidance reporting based on program-specific guidance. Once complete, another member of management reviews the SEFA and general ledger details for accuracy. When questions arise, discussion will occur to ensure accuracy in the amounts reported on the SEFA.