Finding Text
Finding 2024-001
Schedule of Federal Awards Management (SEFA)
The Organization did not have adequate internal controls in place to monitor cumulative Federal expenditures. As a result, management was unaware that total Federal award expenditures exceeded the $750,000 threshold during the fiscal year ended June 30, 2024, triggering the requirement for a Single Audit under 2 CFR § 200.501.
Federal Agency: Multiple (Various pass-through and direct Federal awards)
AL #: Various.
Compliance Requirement: Audit requirement 2 CFR § 200.501(a)
Type of Finding: Noncompliance and material weakness in internal control over compliance.
Repeat Finding: No.
Criteria: According to 2 CFR § 200.501(a), a non-federal entity that expends $750,000 or more in Federal awards in a fiscal year must have a Single Audit conducted in accordance with the Uniform Guidance.
Cause: The Organization lacked a centralized process or tracking mechanism to compile and monitor all Federal award expenditures, including those from multiple departments and programs. As a result, there was no timely assessment of whether the Single Audit threshold was met.
Effect: The Organization failed to identify its obligation to undergo a Single Audit in a timely manner. This delay may have hindered Federal oversight, risked late reporting to the Federal Audit Clearinghouse (FAC), and potentially affected the Organization’s compliance with the terms and conditions of its Federal awards.
Questioned Costs: No questioned costs identified.
Recommendation: We recommend that the Organization implement formal procedures to regularly track and monitor cumulative Federal expenditures across all departments, projects and programs. This should include a centralized review process on at least a quarterly basis to assess whether the Single Audit threshold is approaching or exceeded. Procedures should be updated to include:
Establishing a formal process to track all Federal awards on an ongoing basis, including grant numbers, Assistance Listing Numbers (ALNs), contract periods, award amounts, and qualifying expenditures.
Calculating Federal expenditures based upon expenses incurred rather than cash received or invoiced.
Assigning responsibility to a specific individual or department for maintaining the SEFA throughout the year.
Implement quarterly monitoring procedures to track cumulative Federal expenditures and proactively assess whether the Single Audit threshold is likely to be met.
Ensure that program managers and finance personnel are regularly trained to understand the reporting, compliance and audit requirements tied to Federal awards.
Implementing these steps will improve the Organization’s ability to meet Federal reportingdeadlines and meet compliance and audit requirements.
Management Response:
We acknowledge AAFCPAs’ findings regarding the lack of a formal, ongoing process for maintaining the Schedule of Expenditures of Federal Awards (SEFA) and monitoring our Federal expenditure levels in relation to the Uniform Guidance Single Audit threshold.
Management agrees with the recommendation and recognizes the importance of implementing a structured process to track and monitor Federal award expenditures. In response to the finding, we are taking the following corrective actions:
Effective June 24, 2025, the finance department will implement a standardized process for tracking all Federal awards.
We will ensure that all Federal expenditures are tracked and reported on an incurredexpense basis.
The responsibility for maintaining and updating the SEFA will be formally assigned to the Assistant Director of Finance.
Beginning in the next fiscal quarter, the finance team will conduct quarterly reviews of cumulative Federal expenditures to proactively assess our proximity to the Single Audit threshold. Findings will be documented and reviewed by the Sr. Director of Finance.
We will ensure program managers, finance personnel, and the FS Team are aware and understand Federal compliance, reporting requirements, and audit thresholds.
We believe these actions will significantly strengthen our compliance framework, enhance transparency, and ensure that the Organization remains fully prepared for future audits.