Finding Text
Finding Reference 2025-02 Assistance Listing Number 21.027 Coronavirus State and Local Fiscal Recovery Funds Name of Federal Agency Department of Treasury Type of Finding Material Weakness on Internal Control and Noncompliance Condition During the audit, management initially provided a Schedule of Expenditures of Federal Awards (SEFA) that required revision because the total federal expenditures reported for Program 21.027, Coronavirus State and Local Fiscal Recovery Funds, were incomplete. Specifically, expenditures totaling $1,084,942 that had already been reported to the pass-through entity were omitted from the SEFA, resulting in an understatement of total federal awards expended under the program. A similar condition was reported in the prior year’s single audit as finding No. 2024-05. Criteria In accordance with 2 CFR § 200.510(b) (Financial Statements and SEFA Requirements), the auditee must: 1. Prepare an accurate SEFA that includes the total federal awards expended for the period under audit. 2. Ensure the SEFA is complete, accurate, and properly classified by fiscal year. 3. Provide sufficient information to allow auditors to test compliance with federal requirements. Cause The errors in the preparation of the SEFA indicate deficiencies in internal controls over the financial reporting process related to federal awards. Specifically, management did not implement sufficient oversight and reconciliation procedures to ensure that all federal expenditures were accurately identified, classified, and reported within the appropriate fiscal year. In addition, the review process over the SEFA prior to submission to the auditors was not adequately designed or executed to detect and correct reporting omissions and misstatements. Effect As a result of the deficiencies in internal controls over SEFA preparation, the Schedule of Expenditures of Federal Awards was initially misstated and required revision to properly reflect total federal awards expended under Assistance Listing No. 21.027. The omission of expenditures increased the risk of material misstatement in the SEFA and could have resulted in an inaccurate representation of federal funding expended by the Authority. Additionally, the failure to initially prepare a complete and accurate SEFA resulted in noncompliance with 2 CFR § 200.510(b), which requires the auditee to provide a full and accurate accounting of federal expenditures for the period under audit. Questioned Costs No questioned costs were identified, as the issue relates to the misclassification and misstatement of expenditures, rather than the allowability of costs. Recommendation To ensure compliance with 2 CFR § 200.510(b) and improve internal controls over SEFA preparation, we recommend that the Authority: 1. Implement a formal review and reconciliation process to ensure federal expenditures are accurately reported in the correct fiscal year. 2. Enhance communication between finance and grant administration personnel to improve accuracy in expenditure classification. 3. Provide additional training to staff responsible for SEFA preparation on Uniform Guidance requirements for federal reporting. 4. Require a final, documented supervisory review of the SEFA before submission for audit to prevent reporting inaccuracies. Views of Responsible Officials Refer to Management’s unaudited corrective action plan.