Finding Text
2024-002- Inadequate Preparation of the Schedule of Expenditures of Federal Awards (SEFA) Federal Agency: U.S. Department of the Treasury Award Name: Coronavirus State and Local Fiscal Recovery Funds Program Year: 2024 Assistance Listing Number: 21.027 Finding Type: Material weakness in in internal control over compliance and noncompliance. Criteria: Management is responsible for the preparation of the Schedule of Expenditures of Federal Awards (SEFA) for the period covered by the financial statements. The SEFA must be complete, accurate and include all federal awards expended, properly identified by Assistance Listing Number. Condition: The Schedule of Expenditures of Federal Awards presented for audit required multiple drafts. During the audit, it was noted that the original SEFA provided by management was incomplete and materially misstated. Supporting documentation was not readily available to reconcile the SEFA to the financial statements or to provide a clear audit trail for the federal expenditures reported. Cause of Condition: The deficiencies were the result of inadequate internal controls and oversight over the SEFA preparation process. There was no formal reconciliation of federal expenditures to the general ledger, and supporting documentation was not organized or maintained in a way that allowed for accurate SEFA preparation or audit review. The District received guidance from the grantor to charge multiple years’ worth of expenditures to the grant which also led to difficulties preparing the SEFA. Effect of Condition: The materially misstated SEFA may result in noncompliance with Uniform Guidance reporting requirements and hinder the auditor’s ability to properly identify major programs and assess the risk of material noncompliance. The lack of documentation also increases the risk of errors or omissions going undetected. Recommendation: It is recommended that management establish formal procedures for SEFA preparation, including timely reconciliation of federal expenditures to the general ledger, documentation and retention of supporting schedules and source data, and review and approval of the SEFA prior to submission to the auditors. View of Responsible Officials and Planned Corrective Action: The complexity of the grant reporting caused a misunderstanding as to exactly what costs were relevant to be included in the SEFA. The District is now better informed as far as what needs to be included in the SEFA. Planned Implementation Date of Corrective Action: July 2025 Person Responsible for Corrective Action: F.X. Flinn, Board Chair