Finding Text
Finding 2023-003 – SEFA Reporting Federal Program: COVID-19 Coronavirus State and Local Fiscal Recovery Funds Disaster Grants – Public Assistance ALNs: 21.027 97.036 Federal Agency: U.S. Department of Treasury U.S. Department of Homeland Security Federal Award Years: October 1, 2022 – September 20, 2024 (21.027) January 1, 2023 – December 31, 2023 (97.036) Criteria: 2 CFR, Part 200 – Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, Subpart F, §200.510(b) requires that auditees prepare a schedule of expenditures of Federal awards for the period covered by the auditee’s financial statements which must include the total Federal awards expended as determined in accordance with §200.502. Additionally, 2 CFR 200.303 requires non-Federal entities receiving Federal awards to establish and maintain internal controls designated to reasonably ensure compliance with Federal laws, regulations and program compliance requirements. Effective internal controls should include procedures to ensure federal expenditures are accurately and completely reported on the SEFA. Condition Found, Including Perspective: The System did not have adequate controls relating to the reporting of expenditures on the SEFA for the FEMA – Disaster Grants – Public Assistance and the Coronavirus State and Local Fiscal Recovery Funds programs. Specifically, the System did not have a control in place to ensure that all FEMA awards obligated during the year were recorded on the SEFA. Additionally, the System did not have a control in place to ensure that all incurred expenditures were properly accrued on the SEFA. As a result, the expenditures on the SEFA were understated as follows: • Expenditures of $2,038,362 for the FEMA – Disaster Grants – Public Assistance program were obligated and incurred as of December 31, 2023 but not recorded on the SEFA. • Expenditures of $2,790,267 for the Coronavirus State and Local Fiscal Recovery Funds program were incurred but not accrued for at year end. • Expenditures of $7,529,167 for the Coronavirus State and Local Fiscal Recovery Funds program which were incurred during 2023 and subsequently identified by management to be submitted for reimbursement under the federal award. Possible Cause and Effect: While the System performs a review during the compilation of the SEFA, controls were not designed or implemented effectively to ensure that amounts were properly recognized on the SEFA in the period in which they were expended. Failure to establish effective internal controls regarding financial reporting for the preparation of the SEFA may prevent the System from completing an audit in accordance with the timelines of Uniform Guidance. Questioned Costs: None. Statistical Validity: The sample was not intended to be, and was not, a statistically valid sample. Repeat Finding in the Prior Year: This is not a repeat finding. Recommendation We recommend that management implement appropriate controls and processes to ensure that the SEFA is complete and accurate. Views of Responsible Officials: Grady Memorial Hospital Corporation will implement a control and process to ensure that expenditures are properly reflected on the SEFA.