Finding Text
Finding: 2024-003 CFDA Number: 14.218 Program Name: Community Development Block Grants Federal Agency: U.S. Department of Housing and Urban Development Type of Finding: Federal Award Finding Compliance Requirement: Reporting Questioned Costs: N/A Criteria According to 2 CFR 200.510(b), the auditee must prepare a SEFA that includes all federal awards expended, listed by federal program and Assistance Listings Number, along with the total amount provided to subrecipients. The SEFA must also include notes that describe the significant accounting policies used in preparing the schedule. The expenditures must be reported on the same basis of accounting as the auditee’s financial statements. Condition During our audit of the Friends of the Mission's SEFA for the fiscal year ended December 31, 2024, we noted that the SEFA did not accurately report the total federal awards expended for the U.S. Department of Housing and Urban Development, Assistance Listings Number 14.218. The SEFA understated expenditures by $409,477 from the Community Development Block Grants passed through from The City of Woodland. Cause The auditee’s internal controls over the preparation of the SEFA were not sufficient to ensure all federal expenditures were accurately identified and reported. Additionally, staff responsible for SEFA preparation were not fully trained on the requirements of 2 CFR 200.510(b). Effect: The inaccurate reporting of federal expenditures in the SEFA could lead to noncompliance with federal award requirements, misstatements in the single audit report, and potential delays or errors in the submission of the data collection form to the Federal Audit Clearinghouse. This may also impact the auditee’s ability to demonstrate compliance with federal regulations. Recommendations: We recommend that Friends of the Mission implement the following corrective actions: 1. Develop and document a formal process for preparing the SEFA, including procedures to identify and track all federal awards. 2. Provide training to staff responsible for SEFA preparation on the requirements of 2 CFR 200.510(b). 3. Implement a review process to ensure the SEFA is complete, accurate, and consistent with the auditee’s financial statements prior to submission. 4. Reconcile the SEFA with the general ledger and federal award records to ensure all expenditures are properly reported. Management's Response Management is aware of the finding and has taken steps to rectify the finding so that it does not repeat in future years.