Finding Text
Finding Reference 2024-002: Inaccurate SEFA Reporting Federal Agency: U.S. Department of Commerce Compliance Requirement: Reporting Federal Program: 11.034 - MBDA Business Center- Capital Readiness Program Grant Award: MB23OBD8020301 Type of Finding: Significant Deficiency in Internal Control over Compliance, Other Matters Condition/Context: SEFA provided for audit did not accurately reflect federal expenditures for the Capital Readiness Program as of year-end. Specifically, the SEFA was not reconciled to the underlying financial statements, and differences were noted between reported federal expenditures, receivables, and deferred revenue balances. Criteria: Per 2 CFR 200.510(b), auditees must prepare a SEFA for the period being audited that accurately reflects federal award expenditures and is supported by the accounting records. The SEFA should reconcile to the financial statements. Cause: The SEFA was prepared using incomplete or inaccurate information and was not reconciled to the financial records prior to submission for audit. Effect: Failure to prepare an accurate SEFA increases the risk of audit adjustments, delays in completing the audit, and potential noncompliance with Uniform Guidance reporting requirements. Questioned Costs: None Recommendation: We recommend that CRMSDC implement stronger year-end closing and review procedures to ensure that grant revenue, deferred revenue, and receivables are accurately recorded. SEFA preparation should include a reconciliation process to the general ledger and supporting schedules to ensure completeness and accuracy. Views of Responsible Officials and Planned Corrective Actions: See Corrective Action Plans section.