Finding Text
Finding Reference 2024-05
Assistance Listing Number 20.205 Highway Planning and Construction (Federal-Aid Highway Program)
21.027 Coronavirus State and Local Fiscal Recovery Funds
Name of Federal Agency Department of Transportation / Department of Treasury
Type of Finding: Material Weakness on Internal Control and Noncompliance
Condition:
During the audit, management repeatedly provided inaccurate versions of the Schedule of Expenditures of Federal
Awards (SEFA) to the auditors, requiring multiple revisions to correct errors in the total federal awards expended for
programs 20.205 Highway Planning and Construction (Federal-Aid Highway Program) and 21.027 Coronavirus State
and Local Fiscal Recovery Funds.
Criteria:
In accordance with 2 CFR § 200.510(b) (Financial Statements and SEFA Requirements), the auditee must:
1) Prepare an accurate SEFA that includes the total federal awards expended for the period under audit.
2) Ensure the SEFA is complete, accurate, and properly classified by fiscal year.
3) Provide sufficient information to allow auditors to test compliance with federal requirements.
Cause:
The recurring errors in the SEFA preparation indicate a lack of effective internal controls over preparation of the
SEFA, particularly in ensuring that expenditures are accurately classified and reported within the correct fiscal year:
A lack of oversight and reconciliation procedures to ensure expenditures are reported in the correct fiscal
year.
Inadequate review processes before submission of the SEFA to the auditors.
Effect:
The errors in the SEFA resulted in the following issues:
Increased Risk of Material Misstatements within the SEFA – The multiple revisions required to correct
significant errors in reported expenditures highlight a heightened risk of material misstatements in the SEFA,
which could lead to misrepresentation of federal funding received and expended.
Noncompliance with Uniform Guidance Requirements – The failure to prepare an accurate SEFA resulted in
noncompliance with 2 CFR § 200.510(b), which requires the auditee to provide a complete and accurate
accounting of federal expenditures for the audit.
Questioned Costs:
No questioned costs were identified, as the issue relates to the misclassification and misstatement of expenditures,
rather than the allowability of costs.
Recommendation:
To ensure compliance with 2 CFR § 200.510(b) and improve internal controls over SEFA preparation, we recommend
that the Authority:
1) Implement a formal review and reconciliation process to ensure federal expenditures are accurately reported
in the correct fiscal year.
2) Enhance communication between finance and grant administration personnel to improve accuracy in
expenditure classification.
3) Provide additional training to staff responsible for SEFA preparation on Uniform Guidance requirements for
federal reporting.
4) Require a final, documented supervisory review of the SEFA before submission for audit to prevent reporting
inaccuracies.
Views of Responsible Officials
Refer to Management’s unaudited corrective action plan.