Finding Text
2024-002 [2023-002]—SF 425 Reporting • Type of Finding:o (F) Significant Deficiency in Internal Control Over Compliance of Federal Awards o (G) Instances of Noncompliance related to Federal Awards • Federal Agency: United States Department of Agriculture • Federal Program Name: Food Insecurity Nutrition Incentive Grants Program • Assistance Listing Number: 10.331 • Federal Award Identification Number and Year: 2022-70423-38069, 2020-70030-33124, 2021-70030-35719• Award Period: Project period: multiple; Budget period: multiple • Questioned Costs: NoneStatement of ConditionNMFMA did not have adequate controls over the SF-425 reporting timeline. For two out of the three SF-425 Federal Financial Reports tested, the annual reports were submitted after the due date (90 days for annual reports). Also, the reports seem to have some clerical errors and the amounts reported did not match the general ledger for the period reported, due to markets payments being reconciled late. The difference is immaterial, and client will adjust in the next report. Criteria In accordance with 2 CFR 200.327 (Financial Reporting) and award terms requiring SF-425 is required to be submitted for the Food Insecurity Nutrition Incentive Grants program. Recipients use the SF-425 as a standardized format to report expenditures under Federal awards, as well as, when applicable, cash status. The due dates are 30 days after the end of the reporting period for quarterly reports, and 90 days after the end of the reporting period for the annual reports. Also, the reports need to be reviewed for accuracy and completeness.CauseNMFMA has not properly implemented a formal reporting calendar, responsibility matrix, or documented pre-submission tie-out/review due to staff turnoverEffect Noncompliance with reporting requirements; risk of USDA sanctions; risk that SEFA and drawdown monitoring rely on inaccurate data. Recommendation Establish an SF-425 compliance calendar with automated reminders; assign preparer and independent reviewer roles; perform a documented tie-out (SF-425 to GL, bank, and SEFA) with sign-offs before submission; NMFMA staff should improve internal controls by implementing reminders with the due dates of the reports and reviewing the accuracy of the reports before submission. View of Responsible Official The Executive Director will take action to make sure USDA reports are filed on time. The ED will work with the Finance Director and other accounting staff to ensure deadlines are met.Timeline Target implementation September 30, 2025. Staff Responsible Executive Director