Finding Text
Finding 2023-005 – SEFA Preparation – Material Weakness and Noncompliance Federal Program: Aging Cluster Federal Agency: U.S. Department of Health and Human Services ALN: 93.044, 93.045, 93.053 (Aging Cluster) Federal Award Number: 2301ALOASS, 2101ALSSC6, 2301ALOACM/2301ALOAHD, 2101ALCMC6/2101ALHDC6 Compliance Requirement: Reporting Criteria: 2 CFR 200.510(b) requires nonfederal entities to prepare a Schedule of Expenditures of Federal Awards (SEFA) that accurately reflects total federal expenditures for each federal program for the fiscal year. In addition, entities are required to maintain effective internal control over financial reporting and compliance to ensure that federal program expenditures are properly recorded, accumulated, and reported in accordance with federal requirements. Condition: During matching testing of the Aging Cluster, we identified errors in the preparation of the SEFA. Specifically, the expenditures reported on the initial SEFA for the Aging Cluster did not agree to the amounts reported on supporting reports submitted to the federal awarding agency for 4 out of the 8 reports selected for testing. The initial SEFA understated federal expenditures by approximately $502,000. Management indicated that the discrepancy resulted from errors in recording meals certificate revenue and complications arising from changes in accounting software during the fiscal year. The SEFA was subsequently corrected during the audit. Cause: Internal controls were not adequately designed or implemented to ensure that meals certificate revenue was properly recorded and that data migrated from the old accounting system into the new accounting system was complete and accurate for SEFA reporting purposes. Effect: This misstatement increased the risk that federal expenditures were not reported in accordance with Uniform Guidance. Repeat Finding: This is not a repeat finding. Questioned Costs: None noted. Recommendation: Warren Averett recommends that the Commission strengthen its documented policies and procedures regarding the recording and reporting of federal expenditures, particularly related to meals certificate revenue. This should include establishing formal reconciliation procedures between the trial balance, SEFA, and reports submitted to federal awarding agencies. View of Responsible Officials: See Corrective Action Plan at the end of the report.