Finding Text
Finding 2022-002: Inaccurate SEFA - Material Weakness
Name of Federal Agency: U.S. Department of Health and Human Services
Federal Program Name and Assistance Listing Number: CCDF Cluster, 93.575
Federal Award Identification Number and Year: 2101HICSC6, 2021
Name of Pass-through Entity: State of Hawaii Department of Human Services
Criteria: In accordance with 2 CFR 200.302 (Financial Management), a grant recipient's financial management system must be sufficient to permit the preparation of reports required by general and program-specific terms and conditions; the tracing of funds to a level of expenditures adequate to establish that such funds have been used according to the federal statutes, regulations, and the terms and conditions of the federal award.
In addition, 2 CFR 200.510 (Financial Statements) states in part 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 2 CFR 200.502. At a minimum, the schedule must include:
• All individual Federal programs by Federal agency.
• For Federal awards received as a subrecipient, the name of the pass-through entity and identifying number assigned by the pass-through entity must be included.
• Provide total Federal awards expended for each individual Federal program and the Assistance Listings Number or other identifying number when the Assistance Listings information is not available.
• Include the total amount provided to subrecipients from each Federal program.
Condition: The Organization had a significant revision to the SEFA and management's initial review and approval process did not detect the error.
Cause: The Organization's internal controls over the preparation and review of the SEFA were not operating effectively.
Effect or Potential Effect: Inadequate controls over the preparation of the SEFA could result in financial misstatements or potential noncompliance.
Questioned Costs: N/A
Context: Management's initial review and approval of the SEFA did not identify $2.5M of expenditures that should have been recorded in the subsequent fiscal year.
Identification as a Repeat Finding: This finding is not a repeat finding.
Recommendation: We recommend the Organization strengthen its policies, procedures, and controls for the identification of federal awards to ensure a complete and accurate SEFA is prepared in a timely manner.
Views of Responsible Officials: Management concurs with the finding and will implement a proper expenditure reporting process, reconciled monthly, to avoid recurrence during future audits.