Finding Text
2023-004 Improve Internal Controls over the Preparation of the Schedule of Expenditures of Federal Awards (SEFA) Federal Program(s) Information All federal programs Type of Finding Compliance – Other Matters Internal Control over Compliance – Significant Deficiency Criteria or Specific Requirement The City is required to prepare a SEFA in accordance with the prescribed guidelines of the Uniform Guidance. Condition and Context The City did not properly report a net impact of $602,322 in expenditures on the SEFA when originally prepared due to lack of controls in place over preparation and review of the SEFA. Net impact on expenditures was computed as follows: Assistance Listing Number Expenditure Adjustment Reasoning 97.044 $554,843 Entry booked to program that was not reflected in client prepared SEFA. 97.036 ($299,215) Expenditures incorrectly carried forward from prior year SEFA. 21.027 ($608,782) Expenditures incorrectly included in FY23 that did not relate to FY23. 14.239 $1,440,635 Add balance of loans with continuing compliance requirements as of the beginning of the audit period. 10.555 ($485,159) Remove non-federal expenditures related to school lunch program. SECTION III – FEDERAL AWARD FINDINGS AND QUESTIONED COSTS (CONTINUED) Cause The City did not have adequate controls in place in order to properly report federal expenditures. Effect or Potential Effect Due to the weakness in internal controls noted above, there is a risk that amounts reported on the SEFA are not complete and accurate. The lack of a complete and accurate SEFA may impact the determination if a single audit is required, as well as major program determination. Misstating expenditures on the SEFA results in the City being out of compliance with the requirements set forth in the underlying grant agreements and the Uniform Guidance. Such finding could impact subsequent federal funding. Questioned Costs No questioned costs are reported. Identification as a Repeat Finding This was not a finding in the prior year. Recommendation The City should ensure that adequate procedures and controls are in place to ensure that the SEFA is complete and accurate. This should include controls requiring the reconciliation of federal expenditures to the appropriate supporting documentation (e.g., general ledger, grant reports, etc.) and formal review by a knowledgeable individual following preparation of the SEFA. Views of Responsible Official Management’s corrective action plan is included at the end of this report after the Schedule of Prior Year Findings.