Finding 1149981 (2024-004)

2024-004 - Material Misstatement of the Schedule of Expenditures of Federal Awards (SEFA) Finding Type: Material weakness in internal control over compliance Federal Program: 21.027 Coronavirus State and Local Fiscal Recovery Funds Compliance Requirement: Reporting Condition/Finding: The Schedule of Expenditures of Federal Awards (SEFA), as initially provided for audit, contained material misstatements. The original version of the SEFA did not accurately report the total amount of federal expenditures and required significant audit adjustments to reflect the proper award amounts and program classifications in accordance with the Uniform Guidance. Criteria: Per 2 CFR §200.510(b), the auditee must prepare a SEFA that accurately and completely discloses all federal awards expended during the fiscal year, including the name of the federal program, assistance listing number, amount expended, and applicable pass-through entities. This schedule must be prepared in accordance with GAAP and the Uniform Guidance. Cause: The misstatements were due to inadequate internal controls over the preparation and review of the SEFA. The Village lacked a formal process to ensure the completeness and accuracy of reported federal expenditures prior to submission for audit. Effect: The SEFA, as originally submitted, materially misstated the Village’s federal expenditures for the fiscal year, which could have resulted in the incorrect identification of major programs and misrepresentation of federal activity in the audit. This represents a material weakness in internal control over compliance. Recommendation: We recommend that the Village implement procedures to ensure that the SEFA is prepared using complete, reconciled grant expenditure data and that it is reviewed by a qualified individual prior to submission for audit. Supporting documentation should be maintained to substantiate amounts reported by federal program. View of Responsible Officials: Management’s response and planned corrective action can be found in the accompanying Corrective Action Plan.