Finding Text
Federal Award Agency: U.S. Department of Health and Human Services Federal Awards: 93.224 / 93.527 – Health Center Program Cluster, 93.566 - Refugee and Entrant Assistance State/Replacement Designee Administered Programs, and 93.526 – Grants for Capital Development in Health Centers Criteria: The auditee must prepare a Schedule of Expenditures of Federal Awards (SEFA) that accurately presents total federal expenditures for each program, including information on pass-through awards and subrecipients. This is required by the Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (2 CFR Part 200, §200.510(b)). Condition: During the audit of the auditee's SEFA for the year ended December 31, 2022, we noted discrepancies related to incorrect identification of Assistance Listing Numbers for certain grants, as well as difficulty providing initial supporting detail for balances of expenditures for certain Federal programs. Effect: The inaccurate SEFA presented an unreliable representation of the auditee's federal expenditures to external stakeholders, including the federal awarding agency and any pass-through entities. This condition could lead to: • Increased scrutiny from grantors. • Inaccurate information being submitted to the Federal Audit Clearinghouse. • The potential misallocation or mismanagement of federal funds. • An opinion modification on the SEFA from the independent auditor, particularly regarding its presentation in relation to the financial statements. Cause: The auditee lacks sufficient internal controls over the preparation and review of the SEFA. Specifically, there is no established process to reconcile federal expenditures reported on the SEFA to the auditee's underlying accounting records. A formal review process involving an individual independent of the preparation was not conducted to ensure the SEFA was complete and accurate before submission to the auditors. Recommendation: We recommend the auditee implement the following corrective actions: • Establish and document a formal, multi-level review process for the SEFA before it is submitted for audit. • Require that a staff member independent of the SEFA's preparation perform a detailed reconciliation of the SEFA's data to the general ledger and supporting grant documents. • Enhance internal controls to ensure all federal awards are properly identified, logged, and included on the SEFA, including all required details such as the ALN, pass-through entity, and subrecipient information. • Train relevant staff on the requirements for accurate SEFA preparation, including the required notes and the importance of using the correct ALN. Repeat finding?: No Views of responsible officials and planned corrective actions: See attached letter. Reportable questioned costs: None