FAC Explorer

Finding 1166225 (2025-001)

Material Weakness Repeat Finding
Requirement
B
Questioned Costs
-
Year
2025
Accepted
2025-12-23
Audit: 377225
Organization: South Central Kansas Economic Development District, Inc. (KS)
Auditor: REGIER CARR & MONROE LLP

AI Summary

  • Core Issue: Expenses were submitted for reimbursement that exceeded the approved grant budget.
  • Impacted Requirements: The entity failed to allocate expenses correctly and did not seek budget revisions prior to reimbursement requests.
  • Recommended Follow-Up: Establish internal controls to monitor grant expenditures against the approved budget to ensure compliance.

Finding Text

U.S. Department of Treasury No. 59.046 – Microloan Program Grant Period Year Ended June 30, 2025 Criteria: Expenses were allocated outside of the approved grant budget. Condition and Context: While quarterly expense reimbursements were submitted timely, the entity did not allocate expenses within the parameters of the approved grant budget. Actual payroll related expenses were less than the approved budget due to staffing changes. Other expenses were over the approved budget. Variances were in excess of 10% of the approved budget expenses. SCKEDD did not obtain approval for a budget revision from the granting agency prior to requesting reimbursement. Effect: Expenses outside of the approved grant budget were submitted for reimbursement. Cause: Monitoring of expenses allocated for reimbursement was not implemented and routinely performed. Recommendation: Internal controls over monitoring of grant expenditures compared to the approved grant budget be established to ensure appropriate compliance with grant regulations. Management Response: Processes are being implemented to ensure appropriate compliance with grant regulations, see corrective action plan.

Corrective Action Plan

Responsible party: Bethany Johnson, Interim Executive Director and Commercial Lending Manager and Tyler Ward, Interim Finance Director and Commercial Lender Implementation date: December 31, 2025 Corrective Action Plan Both Bethany Johnson, Interim Executive Director and Commercial Lending Manager, and Tyler Ward, Interim Finance Director and Commercial Lender, will continue to monitor the budget vs actuals both on a monthly and quarterly basis. Tyler Ward will provide an initial review and Bethany Johnson will provide a secondary review of the financial statements. If any variances are more than 5% over within a category, this category and the overall variances of each line item will be monitored closely to determine if any cumulative changes would cause a 10% or more increase or decrease overall in addition to a particular category. If a budget revision is determined to be required, Tyler Ward will prepare this document and Bethany Johnson will review and sign before submitting it to SBA. A reminder will be added to both Bethany Johnson and Tyler Ward’s SCKEDD calendars along with the existing reporting reminders. This will serve as a secondary reminder to monitor the budget at 90, 60 and 30 days before the end of the grant year. This will ensure that any changes in the 4th quarter can be addressed before the budget revision cutoff date to SBA. Calendar reminders will be added on 12/15/2025, and financials statement variances towards the Microloan grant will be reviewed with more scrutiny moving forward beginning with December 31, 2025 financial statements.

Categories

Subrecipient Monitoring Cash Management Matching / Level of Effort / Earmarking Internal Control / Segregation of Duties

Programs in Audit

ALN Program Name Expenditures
11.307 ECONOMIC ADJUSTMENT ASSISTANCE $1.86M
81.042 WEATHERIZATION ASSISTANCE FOR LOW-INCOME PERSONS $1.01M
93.568 LOW-INCOME HOME ENERGY ASSISTANCE $570,014
10.767 INTERMEDIARY RELENDING PROGRAM $122,548
11.302 ECONOMIC DEVELOPMENT SUPPORT FOR PLANNING ORGANIZATIONS $70,000
59.046 MICROLOAN PROGRAM $59,795
21.027 CORONAVIRUS STATE AND LOCAL FISCAL RECOVERY FUNDS $14,384