Finding Text
Criteria: The Schedule of Expenditures of Federal Awards (SEFA) should be accurately captured, reconciled, and reviewed by the City. Adequate documentation of procedures performed as well as evidence of thorough reviews should be in place. According to GAAP, expenditures should be recognized in the period services are performed or goods are received. Condition: Internal controls over financial reporting lacked oversight and thorough review of federal expenditures being included within the SEFA during fiscal year 2023. Cause and Effect: As a result, the City improperly included approximately $569,000 in expenditures in the initial SEFA received during audit fieldwork. Of this total, $430,000 was only transfers during the year rather than funds spent during fiscal year 2023. The remaining roughly $139,000 related to expenditures in assistance listing number (AL#) 21.106 which were appropriately recorded for financial statement purposes during fiscal year 2022 but failed to include these costs in the 2022 SEFA. The City then initially reported the approximately $139,000 spending on the 2023 SEFA. Recommendation: We recommend that the City review the current procedures for SEFA preparation and implement the necessary changes to ensure accurate reporting of financial information on the SEFA. We also recommend the City establish procedures to timely reconcile federal revenues to its federal expenditures. Management Response: We have reviewed current procedures regarding SEFA preparation and have implemented necessary changes to ensure accuracy. We have also established procedures to ensure a timely reconciliation of federal revenues and expenses.