Finding Text
Finding #2024-004 – Reporting – Significant Deficiency and Other Noncompliance. Applicable federal programs: All programs. Criteria: Financial management – Management is responsible for establishing a system of internal control over financial reporting that includes identifying, in its accounts, all federal awards received and expended in accordance with Uniform Guidance §200.302. Management is also responsible for preparing a schedule of expenditures of federal awards (SEFA) and for ensuring expenditures are reported in accordance with Uniform Guidance §200.510. Condition and context: The SEFA originally provided by management erroneously included a program that was not subject to Uniform Guidance and did not include two programs that were subject to Uniform Guidance. Additionally, an adjustment of approximately $165,000 was required to properly report the value of commodity expenditures in accordance with KCM’s valuation policy. Cause: As a result of turnover, management, including key accounting and grant management positions, was new to the organization and was not familiar with all federal grants at the commencement of the audit. The grants and accounting personnel worked with the audit team to collect the information needed for the SEFA and to reconcile the federal expenditures in the general ledger to that of the final SEFA. Effect: Failure to adequately establish and maintain a system of internal controls over preparation of the SEFA adversely affected KCM’s ability to correctly identify and summarize federal awards for reporting in accordance with the Uniform Guidance. Recommendation: Strengthen policies and procedures to ensure all federal grant expenditures subject to Uniform Guidance are properly recorded and classified in the general ledger system by class code. Reconcile federal expenditures to the SEFA using the class code reports. Views of responsible officials and planned corrective actions: Management agrees with the finding. See Corrective Action Plan.