Finding 1145685 (2024-003)

Assistance Listing, Federal Agency, and Program Name 97.039, Hazard Mitigation Grant Program Federal Award Identification Number and Year 4394-31, 2024 Pass through Entity South Carolina Emergency Management Division Finding Type Material weakness Repeat Finding No Criteria The Schedule of Expenditures of Federal Awards should include all expenditures associated with federal grants during the fiscal year and there should be controls to ensure no double dipping of expenditures across federal grants. Condition The Organization did not capture certain Hazard Mitigation Grant funding that was expended in a previous period on the SEFA and did not effectively apply controls to ensure expenditures are tracked to a unique grant in a proper period. Questioned Costs None If questioned costs are not determinable, description of why known questioned costs were undetermined or otherwise could not be reported N/A Identification of How Questioned Costs Were Computed N/A Context The Organization improperly excluded $1,974,294 of expenditures related to the Hazard Mitigation Grant Program from the September 30, 2023 Schedule of Expenditures of Federal Awards. The Organization also did not apply appropriate controls to ensure expenditures are tracked to a unique grant in a proper period. Cause and Effect The Organization does not have an award management system connected to their accounting software to appropriately track federal grants and their associated expenditures. This prevented the Organization from being able to implement effective controls to validate expenditures were applied to the proper grant in the proper period. This also resulted in the Organization having an incomplete SEFA for the fiscal year ended September 30, 2023. Recommendation Our recommendation is that the organization implements a centralized grants management system that is linked to the accounting system to clearly link expenditures to their corresponding federal award. Views of Responsible Officials and Planned Corrective Actions The Organization will implement a centralized grant tracking log within the financial system that uniquely identifies each federal grant and records expenditures by program and fiscal year. The Organization will conduct annual cross-departmental training on SEFA reporting requirements, emphasizing the importance of accurate and timely classification of federal expenditures. The Organization will require quarterly reconciliations between grant activity logs and the general ledger to validate completeness and timing accuracy before SEFA preparation.