Finding Text
Finding 2024-001: Preparation of the Schedule of Expenditures of Federal Awards Material weakness/other matter noncompliance Federal Agency: U.S. Department of Homeland Security Program Name: Transit Security Grant Programs ALN Number: 97.075 Award Number: 97.075 Award Year: 2024 Criteria: The Uniform Guidance (2 CFR 200.510b) requires that the auditee (typically a non-federal entity receiving federal funds) must prepare a Schedule of Expenditures of Federal Awards (SEFA) for the period covered by its financial statements which must include the total Federal Awards expended as determined in accordance with 2 CFR 200.502. Condition: The SEFA for the year ended June 30, 2024 excluded $2,385,715 in expenditures incurred from the total expenditures reported for the federal awards for ALN 97.075 Rail and Transit Security Grant Program. Cause: The existing internal control procedures for processing funding source reclassifications are not structured to fully support the SEFA reporting cutoff deadline. While a process is in place, it does not fully incorporate all necessary stakeholders early enough in the cycle to ensure timely communication, coordinated review, and approval of reclassifications leading to eligible expenditures being omitted. Effect: Not in compliance with the Uniform Guidance (2 CFR 200.510b). There could be impacts on future funding. Context: As a result of the omission of eligible expenditures, total federal awards for ALN 97.075, Rail and Transit Security Grant Program, were understated by $2,385,715 due to the exclusion of expenditures. This understatement caused the major program determination to be improperly calculated and resulted in a missed major program. Question Costs: None Repeat Finding: No Recommendation: We recommend that the Organization review the schedule of expenditures of federal awards prior to issuance. Views of responsible officials and planned corrective actions: Management agrees with the finding and acknowledges that internal control procedures should be strengthened to ensure adherence to the SEFA reporting cutoff deadline. To address this issue, Management will implement a verification checklist as required supporting documentation for all funding source reclassification journal entries and vouchers, ensuring that all relevant departments have reviewed and approved the entries prior to being posted. The Authority will also establish a cutoff date for Program Offices to submit current year reclassification requests, allowing adequate time for eligibility review and fiscal yearend reporting. In addition, Accounting Policies and Procedures Manual will be updated to include guidelines limiting reclassifications of expenditures incurred in prior fiscal years. The Authority will communicate policy updates incorporate these changes to ensure consistent application across departments.