Finding Text
Finding 2024-001: Reportable Finding Considered a Significant Deficiency – Inclusion of Unallowable Costs in the SEFA
Program Name: STEM Education Assistance Listing #: 47.076 Program Year: 2024
Federal Awarding Agency: National Science Foundation
Compliance Requirement: SEFA Preparation
Criteria: According to 2 CFR Part 200, Subpart F, §200.510(b), the auditee must prepare a 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. The SEFA must also include the CFDA number, the name of the Federal program, and the total amount expended.
Condition: During our allowable cost testing, four exceptions were noted out of 15 selections. The first exception involved a transaction that included an estimated expense exceeding the actual cost incurred and falling outside the grant’s period of allowability. The other 3 exceptions pertained to an expense related to a future fiscal year, which had not yet been incurred at the time of recognition and was outside the grant’s period of performance. The client did not request reimbursement for these expenditures and subsequently removed them from the general ledger in 2024. However, the removal of these expenses was not properly reflected on the SEFA schedule.
Cause: The improper preparation of the SEFA schedule was due to inadequate internal controls over financial reporting and lack of proper training for staff responsible for reporting the SEFA expenditures. Additionally, there was insufficient review and oversight of the SEFA preparation process.
Effect: A total of $19,374 of expenses were incorrectly included in the SEFA. Failure to remove these expenses from the SEFA misrepresented the total amount of federal assistance expanded and may impair the usefulness of the SEFA for the oversight federal agency.
Questioned Costs: None.
Repeat finding: This is not a repeat finding.
Recommendation: We recommend the Organization revise its SEFA preparation procedures to ensure that only allowable and reimbursable expenditures of federal awards are reported. Management should provide additional training to staff responsible for SEFA preparation and implement a formal review process to verify the accuracy of SEFA amounts.
Views of Responsible Officials and Planned Corrective Action (unaudited): See Corrective Action Plan.