Finding 1147232 (2023-002)

Material Weakness in Internal Control over Compliance: Other—Schedule of Expenditure of Federal Awards Preparation Criteria: 2 CFR 200.510 indicates that the auditee must prepare a Schedule of Expenditures of Federal Awards (SEFA) for the period covered by the auditee’s financial statements which must include the total federal awards expended as determined in accordance with 200.502 Basis for Determining Federal Awards Expended. Per 2 CFR 200.502, the determination of when a federal award is expended should be based on when the activity related to the federal award occurs. Generally, the activity pertains to events that require the non-Federal entity to comply with federal statutes, regulations, and the terms and conditions of federal awards, such as: expenditure/expense transactions associated with awards. In addition, 2 CFR Part 200.303 requires the program establish and maintain effective internal controls over federal awards that provide reasonable assurance of compliance with federal statutes, regulations, and the terms and conditions of federal awards. Condition: SEE did not include an existing federally funded contract during the preparation of the SEFA for the year ended December 31, 2023. Cause: SEE was not aware that the contract should be included in the SEFA. Effect or Potential Effect: Due to the control deficiencies described above, if not for auditor assistance, inaccurate expenditures would have been reported to the Federal government. In addition, these errors could result in improper selections of major program(s) for the single audit. Questioned costs: No questioned costs were identified as a result of this compliance finding. Recommendation: We recommend that SEE establish formal procedures to ensure federally funded contracts are included in the SEFA as expenditures. Views of responsible officials and planned corrective actions: Management acknowledges the omission of the federally contract from the auditee’s prepared SEFA. Management is committed to properly preparing the SEFA, and to address this oversight, management will identify trainings for accounting personnel related to SEFA reporting and for those reviewing the schedule, to ensure its accuracy.