FAC Explorer

Finding 1165805 (2024-004)

Material Weakness Repeat Finding
Requirement
L
Questioned Costs
-
Year
2024
Accepted
2025-12-19
Audit: 376639
Organization: Town of Paradise (CA)
Auditor: RICHARDSON & COMPANY LLP

AI Summary

  • Core Issue: The Schedule of Expenditures of Federal Awards (SEFA) was incomplete and required revisions during the audit.
  • Impacted Requirements: Compliance with 2 CFR Part 200, Subpart F, which mandates accurate preparation of the SEFA prior to the audit.
  • Recommended Follow-Up: Implement additional review procedures to ensure the SEFA is complete and reconciled with the general ledger before the audit starts.

Finding Text

Finding 2024-004 – Material Weakness Award No.: Various Federal Grantor: Various 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: The SEFA was not fully reconciled and finalized until after the single audit began. Effect: The expenses included on the SEFA were revised during the single audit, which could have resulted in the auditor not selecting the correct major program or expenses for testing and could have resulted in the single audit not satisfying the requirements of the Uniform Guidance. Recommendation: We recommend additional review procedures be implemented to ensure the SEFA is complete and accurate when the single audit begins and that the schedule is reconciled to the revenue recorded in the general ledger. Views of Responsible Officials and Planned Corrective Action: We agree with the finding and the Town is implementing a comprehensive corrective action plan focused on stabilizing Finance staffing, improving processes, and strengthening internal controls to ensure the Town can prepare accurate financial statements and the SEFA in a timely manner and meet all federal reporting deadlines going forward.

Corrective Action Plan

Finding Reference Number: 2024-004 Description of Finding: The Schedule of Expenditures of Federal Awards (SEFA) was not complete, and expenditures reported on the SEFA were revised during the single audit. Statement of Concurrence or Nonconcurrence: The SEFA required adjustments. Corrective Action: The Schedule of Expenditures of Federal Awards (SEFA) was not complete, and expenditures reported on the SEFA required revision during the single audit due to significant organizational transitions within the Finance Department during the audit period. Much of the team including senior staff was newly hired, resulting in limited historical knowledge of several complex, multi-year capital projects and grant activities. At the same time, the Town was implementing a new account structure and adapting to revised financial coding practices. These overlapping changes created temporary gaps in continuity, processing, and reconciliation workflows, which affected the Town’s ability to accurately reconcile grant activity to the general ledger and compile a complete and accurate SEFA prior to the start of the single audit. To address these issues and ensure accurate SEFA reporting going forward, the Town is implementing a comprehensive corrective action plan focused on stabilizing Finance staffing, improving reconciliation processes, and strengthening internal controls. Key actions include establishing consistent grant billing and reconciliation cycles; developing documented procedures for grant tracking, revenue recognition, and SEFA preparation; and improving financial coding accuracy under the new account structure. Ongoing staff training will reinforce institutional knowledge, and external support may be used as needed for complex reconciliations or project-specific cleanup. These measures will ensure the Town can prepare a complete and accurate SEFA on a timely basis and fully meet federal reporting requirements. Name of Contact Person: Aimee Beleu, Finance Director, (530) 872-6291, abeleu@townofparadise.com Projected Completion Date: 10/1/25

Categories

Reporting

Other Findings in this Audit

  • 1165802 2024-001
    Material Weakness Repeat
  • 1165803 2024-002
    Material Weakness Repeat
  • 1165804 2024-003
    Material Weakness Repeat

Programs in Audit

ALN Program Name Expenditures
14.228 COMMUNITY DEVELOPMENT BLOCK GRANTS/STATE'S PROGRAM AND NON-ENTITLEMENT GRANTS IN HAWAII $11.81M
97.036 DISASTER GRANTS - PUBLIC ASSISTANCE (PRESIDENTIALLY DECLARED DISASTERS) $1.07M
21.027 CORONAVIRUS STATE AND LOCAL FISCAL RECOVERY FUNDS $153,658
11.307 ECONOMIC ADJUSTMENT ASSISTANCE $74,033
97.039 HAZARD MITIGATION GRANT $56,100
20.205 HIGHWAY PLANNING AND CONSTRUCTION $41,154
14.218 COMMUNITY DEVELOPMENT BLOCK GRANTS/ENTITLEMENT GRANTS $4,728
10.766 COMMUNITY FACILITIES LOANS AND GRANTS $4,303