Finding Text
FINDING 2025-001 Significant Deficiency in Internal Control over Compliance – Other Matter Federal Agency: Department of Homeland Security and Department of Health and Human Services Pass through Grantor: Multiple Federal Program(s): COVID-19 Disaster Grants – Public Assistance (Presidentially Declared Disasters and Research and Development Cluster Assistance Listing Number(s): 97.036 and multiple for Research and Development Criteria: Uniform Guidance requires the auditee to prepare a schedule of expenditures of federal awards, (the “Schedule” or “SEFA”), for the period covered by the auditee’s financial statements that includes certain required elements, including total federal awards expended for each individual federal program and ensure the accuracy and completeness of such schedule. Condition/Context: It was identified that Federal Emergency Management Agency (“FEMA”) ALN 97.036 funds totaling approximately $1.8 million were presented on the current year SEFA relating to obligated expenditures for fiscal period from 2021 through 2024. These funds were not previously reported on prior years’ SEFAs. Additionally, there were other grant funds related to the R&D Cluster not initially presented on the current year SEFA totaling approximately $517K. Cause: Management believed FEMA expenditures should be reported on the SEFA only upon reimbursement (received in 2025). However, per the Compliance Supplement, FEMA expenditures should be included when the project is obligated and eligible costs are incurred. For the R&D expenditures, management was unaware that grant funds received on a per-patient basis should be included in the SEFA. Effect: Federal program amounts may be misstated on the Schedule, potentially affecting major program determination and leading to findings or ineligibility of future funding. Recommendation: Management should prepare the Schedule timely, record expenditures when incurred (and obligated, if applicable), reconcile to the financial statements, and implement detailed controls to review the SEFA for accuracy and completeness Repeat Finding: No. Views of Responsible Officials: The Corporation agrees with our recommendation and will implement procedures by June 30, 2026. See Corrective Action Plan.