Finding 1176647 (2025-002)

Identification of the Federal Program: Department of Homeland Security Federal Agency and Program Name: COVID-19 Disaster Grants – Public Assistance (Presidentially Declared Disasters) (FEMA) Assistance Listing #: 97.036 Pass-Through Entity: State of Tennessee Award: All FEMA Projects (Projects 435263, 550461, 684580) Award Year(s): Project 435263: 1/1/2020-7/31/2021 Project 550461: 1/1/2020-7/31/2021 Project 684580: 8/1/2020-6/30/2022 Criteria or Specific Requirement (Including Statutory, Regulatory or Other Citation): 2 CFR 200.303 requires that the non-Federal entity must “(a) establish, document and maintain effective internal control over the Federal award that provides reasonable assurance that the recipient is managing the Federal award in compliance with Federal statutes, regulations and the terms and conditions of the Federal award. These internal controls should align with the guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control - Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).” Condition: Management did not retain documentation over their review and approval of FEMA expenditures prior to submission in the FEMA Portal. Cause: Management represented that FEMA expenditures were reviewed and approved prior to submission; however, supporting documentation over the review and approval was not maintained. Effect or Potential Effect: Unallowable expenditures could have been charged to the federal program. Questioned Costs: $0. Context: There were three project worksheets obligated in FY2025. Management did not maintain documentation over the review and approval over the expenditures submitted to the FEMA . We selected 40 expenditures charged to FEMA, noting no instances of non-compliance. Total FEMA expenses reported on the SEFA for the year ended June 30, 2025, is $9,857,313. Identification as a Repeat Finding: This is not a repeat finding. Recommendation: We recommend Management ensure that appropriate documentation be retained over the review and approval of FEMA expenditures. Views of Responsible Officials: Management understands that additional audit evidence must be retained at a detailed enough level to allow the auditor to meet their reperformance standard. All expenses claimed were eligible and were reviewed by management prior to the submission. The control issue identified is due to the lack of evidence to support approval. Should management have a future FEMA claim we will retain additional audit evidence to enable auditor reperformance of the controls regarding approval of expenditures.