Finding Text
Finding 2024-002 – Significant Deficiency
Award No.: 97.039
Federal Grantor: U.S. Department of Homeland Security, Federal Emergency Management Agency,
Passed-through California Governor’s Office of Emergency Services
Compliance Requirement: Other compliance requirements.
Condition: The schedule of Expenditures of Federal Awards (SEFA) was not complete, and
expenditures reported on the SEFA were revised during the single audit.
Criteria: 2 CFR Part 200, Subpart F (Uniform Guidance) Section 200.502 states, “The auditee should
prepare a Schedule of Expenditures of Federal Awards for the period covered by the auditee’s financial
statements.” Internal controls over the SEFA should be in place ensure accrual basis expenses incurred
under the federal program are properly reported as expenses on the SEFA and are properly reported as
revenue in the financial statements prior to the start of the single audit.
Cause: SEFA was not fully reconciled and finalized until after the single audit began.
Effect: The expenses included on the SEFA for program 97.036, Disaster Grants-Public Assistance
(Presidentially Declared Disasters), program FEMA-4683-DR-CA, were revised during the single audit
and questioned costs in the amount of $131,195 were identified, which could have resulted in the
auditor not selecting the correct major program or expenses for testing and could have resulted in the
single audit not satisfying the requirements of the Uniform Guidance. Context: The District provided cost estimates to the California Governor’s Office of Emergency
Services (CalOES) for the amount of flood damage expenses incurred for FEMA Project 725590 and
710830 that were used by CalOES to reimburse the District. The District did not adequately reconcile
the expenses incurred at year-end to expense reports available in the accounting system and did not
revise the expense estimates provided to CalOES to the actual amounts incurred during the year,
resulting in CalOES overpaying the District and the District using the estimated costs on the SEFA for
the single audit.
Recommendation: We recommend additional review procedures be implemented to ensure the SEFA
is complete and accurate when the single audit begins, which includes reconciling all expenses incurred
under each federal award down to the invoice, payroll check and lowest level of other costs claimed,
cutting-off each expense at year-end and claiming the reconciled qualifying expenses within 45 days
after each quarter end. At year-end, programs should be reviewed for cost adjustments, extensions, and
other changes that should be reflected on the SEFA when reconciling expenses for the SEFA. Separate
program codes should be used for each grant on the SEFA that summarizes expenses down to the
individual invoice level that should be provided to the auditor for the single audit. If overclaimed
amounts are identified, the grantor and/or pass-though agency should be contacted to determine whether
to return the funds or apply the overclaimed amounts to future claims.
Views of Responsible Officials and Planned Corrective Actions: Management’s response and
planned corrective action is included in the Corrective Action Plan included at the end of the report.