Finding 1149921 (2024-005)

Material Weakness
Requirement
L
Questioned Costs
-
Year
2024
Accepted
2025-08-13
Audit: 364209
Organization: City of Lodi (CA)
Auditor: Lsl CPAS

AI Summary

  • Core Issue: The City submitted an incomplete Schedule of Expenditures of Federal Awards (SEFA), affecting the accuracy of major program determinations.
  • Impacted Requirements: Noncompliance with Government Auditing Standards and Uniform Guidance, risking financial penalties and loss of federal funding.
  • Recommended Follow-Up: Implement detailed procedures, enhance staffing, provide training, and conduct regular audits of the SEFA preparation process.

Finding Text

Reference Number 2024-005 – Incomplete Schedule of Expenditures of Federal Awards Evaluation of Finding Material Weakness and Noncompliance – Various Federal Programs Criteria According to the Government Auditing Standards (Yellow Book) and the Uniform Guidance, 2 CFR Part 200, Subpart F—Audit Requirements, sections 200.508 and 200.510, entities receiving federal awards must prepare and submit a complete and accurate Schedule of Expenditures of Federal Awards (SEFA) as part of their annual financial reporting. This schedule is crucial for auditors to determine major programs and conduct the necessary audits in compliance with federal regulations. Condition The City failed to provide a complete SEFA for the fiscal year, leading to inaccuracies pertaining to the ARPA program. This omission resulted in a direct impact on the determination of major programs. Cause The incomplete SEFA was caused by a lack of oversight and insufficient internal controls within the City's financial management department. Effect or Potential Effect The failure to provide a complete SEFA has significant implications, including: • Inaccurate determination of major programs, which can affect the scope and quality of the audit process. • Increased risk of non-compliance with federal regulations, potentially leading to financial penalties and loss of federal funding. Context The City did not submit a complete SEFA for the year ended June 30, 2024, as required by federal guidelines. This incomplete reporting could compromise transparency, affect audit procedures, and hinder compliance with federal regulations. Repeat Finding Yes, in relation to reconciliation of grant activity. Recommendation To address this material weakness, the following actions are recommended: • Develop detailed procedures and timelines: Establish and enforce comprehensive procedures and timelines for the preparation and submission of the SEFA to ensure completeness and accuracy. • Enhance staffing and resources: Allocate adequate staffing and resources to the financial management department to support the accurate compilation and timely submission of the SEFA. • Provide comprehensive training: Offer training to financial management staff on the requirements and importance of the SEFA, including techniques for ensuring its accuracy and completeness.. • Regularly audit the SEFA preparation process: Conduct regular audits of the SEFA preparation process to ensure compliance with established policies and procedures and address any deficiencies promptly. This should be completed monthly and at a minimum quarterly. By implementing these recommendations, the City can strengthen its internal controls, improve the accuracy of its financial reporting, and ensure compliance with Government Auditing Standards and other regulatory requirements. Management Response Management agrees with the finding and recommendations. The City will begin to implement policies and procedures to assist with monthly reconciliations and review processes to mitigate these errors in the future. Reference Number 2024-005 – Incomplete Schedule of Expenditures of Federal Awards Material Weakness and Noncompliance Assistance Listing Number: All Federal Programs reported on the SEFA Criteria Refer to finding 2024-005 in section II above. Condition Refer to finding 2024-005 in section II above. Cause of Condition Refer to finding 2024-005 in section II above. Effect or Potential Effect of Condition Refer to finding 2024-005 in section II above. Questioned costs None. Context Refer to finding 2024-005 in section II above. Repeat Finding Refer to finding 2024-005 in section II above. Recommendation Refer to finding 2024-005 in section II above. Management Response Refer to finding 2024-005 in section II above.

Categories

Reporting Internal Control / Segregation of Duties

Other Findings in this Audit

  • 573479 2024-005
    Material Weakness
  • 573480 2024-005
    Material Weakness
  • 573481 2024-005
    Material Weakness
  • 573482 2024-005
    Material Weakness
  • 573483 2024-005
    Material Weakness
  • 573484 2024-007
    Material Weakness
  • 573485 2024-007
    Material Weakness
  • 573486 2024-007
    Material Weakness
  • 573487 2024-007
    Material Weakness
  • 573488 2024-007
    Material Weakness
  • 1149922 2024-005
    Material Weakness
  • 1149923 2024-005
    Material Weakness
  • 1149924 2024-005
    Material Weakness
  • 1149925 2024-005
    Material Weakness
  • 1149926 2024-007
    Material Weakness
  • 1149927 2024-007
    Material Weakness
  • 1149928 2024-007
    Material Weakness
  • 1149929 2024-007
    Material Weakness
  • 1149930 2024-007
    Material Weakness

Programs in Audit

ALN Program Name Expenditures
21.027 Coronavirus State and Local Fiscal Recovery Funds $1.52M
20.507 Federal Transit Formula Grants $968,004
20.205 Highway Planning and Construction $293,999
14.218 Community Development Block Grants/entitlement Grants $275,179
97.044 Assistance to Firefighters Grant $233,911
20.600 State and Community Highway Safety $96,666
66.818 Brownfields Multipurpose, Assessment, Revolving Loan Fund, and Cleanup Cooperative Agreements $59,155
16.768 Edward Byrne Memorial Justice Assistance Grant (jag) $15,490
16.607 Bulletproof Vest Partnership Program $6,293