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.