Finding 1114727 (2024-002)

Questioned Costs Finding No. 2024 002: Reporting (Material Weakness) $ – Federal Agency: U.S. Department of Commerce Assistance Listing Number and Title: 11.307 Economic Development Cluster Award Number: 07-79-07800 Condition During our audit, we noted the Authority reported an excess amount of $533,990 in federal expenditures in the semi-annual SF-425 federal financial report submitted for the period ended March 31, 2024. Furthermore, we noted that the excess expenditures as reported on the semi-annual SF-425 federal financial report pertained to items for which the associated goods or services were received by the Authority after the report period end date. Criteria Title 2 U.S. Code of Federal Regulations Part 200 requires that the determination of when a Federal award is expended must be based on when the activity related to the Federal award occurs. Cause and View of Responsible Officials The lack of accurate reporting may be attributed to general oversight by Authority management when determining the actual amount of federally funded expenditures incurred during the reporting period. Authority management believes that the expenditures as reported in the semi-annual SF-425 federal financial report submitted for the period ended March 31, 2024 are accurate, however management will implement additional procedures as requested by the external auditor. Effect Failure to file accurate information in reports represents an instance of noncompliance with the requirements of Title 2 U.S. Code of Federal Regulations Part 200. Entities must also maintain accurate records of financial information, which are submitted to the Federal Agencies in accordance with Title 2 U.S. Code of Federal Regulations Part 200. Context A sample of one semi-annual SF-425 federal financial report was selected for audit from a population of two reports for the Economic Development Cluster Program. Our test found that the report did not accurately state the federal share of expenditures incurred during the reporting period. Repeat Finding This is not a repeat finding. Recommendation We recommend that Authority management be more diligent in following their policies and procedures for the preparation and review of federal financial reports to ensure the accuracy of information submitted.