Finding Text
Finding Reference: 2023-002 Inaccurate SEFA Reporting Due to Failure to Reconcile Grants Receivable
Federal Agency: Various
Compliance Requirement: Reporting
Type of Finding: Significant Deficiency in Internal Control over Compliance, Other Matters
Federal Program: Impacts All Federal Award Programs
Grant Award: Various
Condition:
SMTCCAC’s SEFA included incorrect expenditures resulting from unreconciled grants receivable balances. Certain federal expenditures were either overstated or understated because SMTCCAC did not reconcile its grants receivable accounts before preparing the SEFA.
Criteria:
Uniform Guidance (2 CFR Part 200) requires recipients of federal awards to prepare a SEFA that accurately reflects expenditures incurred during the reporting period. Reconciliation of grants receivable is an essential internal control to ensure that SEFA reporting aligns with federal requirements.
Cause:
Management did not implement adequate procedures to reconcile grants receivable accounts prior to the preparation of the SEFA.
Effect:
The SEFA submitted for audit contained material misstatements, including overstated federal expenditures for certain programs and understated expenditures for others. This could result in non-compliance with Uniform Guidance and inaccurate financial reporting.
Questioned Costs:
None
Recommendation:
Management should establish and enforce a grants reconciliation process to ensure that grants receivable are fully reconciled before the preparation of the SEFA. This includes reviewing all grant activity, reconciling receivable balances to underlying documentation, and making necessary adjustments promptly.