Finding 1106744 (2024-001)

Criteria: The requirements of Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, (Uniform Guidance), Subpart F, Audit Requirements, include the following: - The auditee must prepare a schedule of expenditures of federal awards (SEFA) for the period covered by the auditee's financial statements. - The SEFA must include total federal awards expended as determined in accordance with § 200.502. § 200.502 states that the determination of when a federal award is expended must be based on when the activity related to the federal award occurs. Condition: Allowable costs from fiscal years 2022 and 2023 were not submitted for cost reimbursement until fiscal year 2024. Therefore, the fiscal year 2024 SEFA included expenditures for activities that occurred in prior fiscal years. Cause: The Organization identifies the funding source for project expenditures when the activity occurs (expenditure incurred). Incurred expenditures are then submitted to the grantor by the Organization for cost reimbursement. At times, the dates between when expenditures are incurred and submitted for reimbursement cross more than one of the Organization’s fiscal years. Effect: The SEFA may exclude expenditures incurred during the current fiscal year since the Organization did not request reimbursement prior to their fiscal year end. Additionally, the SEFA may include expenditures incurred in a prior fiscal year since reimbursement was requested during the Organization’s current fiscal year. An inaccurate SEFA may lead to the auditor making improper conclusions on which programs require testing as major programs in the current year. Refer to Note D in the Notes to the Schedule Expenditures of Federal Awards for prior year Home Investment Partnership Program expenditures reported on the fiscal year 2024 SEFA. Question Costs: None Recommendation: We recommend the Organization implement procedures to ensure the completion of an accurate and complete SEFA. These procedures may include shortening the length of time between when an expenditure is incurred and when reimbursement is requested.