Finding Text
Finding 2023-003 – Significant Deficiency – Corrections needed to SEFA Award No.: 15.574 Federal Grantor: U.S. Department of the Interior, Bureau of Reclamation. Compliance Requirement: Other compliance requirements. Condition: The schedule of Expenditures of Federal Awards (SEFA) was not complete, and expenditures reported on the SEFA were revised during the single audit. Criteria: 2 CFR Part 200, Subpart F (Uniform Guidance) Section 200.502 states, “The auditee should prepare a Schedule of Expenditures of Federal Awards for the period covered by the auditee’s financial statements.” Internal controls over the SEFA should be in place to ensure accrual basis expenses incurred under the federal program are properly reported as expenses on the SEFA and are properly reported as revenue in the financial statements prior to the start of the single audit. Cause: SEFA was not fully reconciled and finalized until after the single audit began. Effect: Expenses were omitted from the SEFA that should have been included. The SEFA had to be revised over the course of the audit. This delayed the audit testing and could have resulted in the auditor not selecting the correct expenses for testing and could have resulted in the single audit not satisfying the requirements of the Uniform Guidance. Context: The Authority recorded federal contributions on a cash basis method of accounting, which resulted in allowable federal expenditures being subsequently discovered in the amount of $835,371 that should have been accrued as revenue as of year ended February 28, 2022. Additionally, $1,256,145 of allowable federal expenditures were discovered in the year ending February 28, 2023 that were accrued as revenue during the audit. The full amount of $2,091,516 of prior year and current year allowable federal expenditures were tested during the February 28, 2023 single audit. Recommendation: We recommend additional review procedures be implemented to ensure the SEFA is complete and accurate when the single audit begins, which includes reconciling all expenses incurred under each federal award down to the invoice, payroll check and lowest level of other costs claimed, cutting-off each expense at year-end and claiming the reconciled qualifying expenses within 45 days after each quarter end. At year-end, programs should be reviewed for cost adjustments, extensions, and other changes that should be reflected on the SEFA when reconciling expenses for the SEFA. Separate program codes should be used for each grant on the SEFA that summarizes expenses down to the individual invoice level that should be provided to the auditor for the single audit. If overclaimed amounts are identified, the grantor and/or pass-though agency should be contacted to determine whether to return the funds or apply the overclaimed amounts to future claims. Views of Responsible Officials and Planned Corrective Actions: Management’s response and planned corrective action is included in the Corrective Action Plan included at the end of the report.