Finding 1210746 (2025-001)

Material Weakness Repeat Finding
Requirement
L
Questioned Costs
-
Year
2025
Accepted
2026-04-29

AI Summary

  • Core Issue: Certain FEMA funding was incorrectly excluded from prior year Schedules of Expenditures of Federal Awards (SEFA), impacting completeness.
  • Impacted Requirements: Compliance with 2 CFR 200.510, which mandates accurate reporting of all federal awards in the SEFA.
  • Recommended Follow-Up: Review and enhance policies for identifying federal awards, provide training for staff, and implement a checklist and interim SEFA to ensure accuracy.

Finding Text

Section III – Federal Award Findings or Questioned Costs 2025-001 – Completeness of certain programs on the prior years’ Schedules of Expenditures of Federal Awards (SEFA) Cluster: Not applicable Sponsoring Agency: Federal Emergency Management Agency (FEMA) Award Names: Presidential Disaster Declaration for Severe Storms, Straight-line Winds, and Flooding May 3-4, 2020; Presidential Disaster Declaration for COVID-19 beginning January 2020; Presidential Disaster Declaration for Severe Storms, Tornados, Straight-Line Winds and Flooding March 3, 2020 Award Numbers: FEMA-4550-DR-TN; FEMA-4514-DR-TN; FEMA-4476-DR-TN Assistance Listing Titles: Disaster Grants – Public Assistance (Presidentially Declared Disasters) Assistance Listing Numbers: 97.036 Award Year: 2022, 2024 Pass-through entity: Not applicable Criteria 2 CFR 200.510 Financial statements requires auditees to prepare a Schedule of Expenditures of Federal Awards (SEFA) for the period covered by the auditee’s financial statements which must include the total Federal awards expended as determined in accordance with 2 CFR 200.502. The information presented should be consistent with accounting records and other federal guidance. Condition The following errors were identified related to funding that was improperly excluded from prior year SEFAs and is being included in the FY2025 SEFA: • FEMA funding obligated and expended in FY2022 totaling $11.9 thousand, which was incorrectly excluded from the FY2022 SEFA. Management has included this amount on the FY2025 SEFA. • FEMA funding obligated and expended in FY2024 totaling $1.7 million, which was incorrectly excluded from the FY2024 SEFA. Management has included this amount on the FY2025 SEFA. These errors did not impact the major program determination in the affected years. Cause The errors identified in the SEFA occurred because the organization did not have comprehensive and well-documented policies and procedures to ensure that all federal awards expended were consistently and accurately identified and reported. Additionally, there was insufficient communication with personnel responsible for compiling the SEFA. These factors collectively resulted in incomplete reporting and the exclusion of certain federal expenditures. Effect A SEFA that is not complete and accurate could impact the scoping of an entity’s major programs and result in incomplete information being provided to the federal government. Questioned Costs None noted. Recommendation We recommend NES review their policies and procedures to identify Federal awards expended in accordance with 2 CFR 200.502 and provide training to personnel. Additionally, we recommend updates on federal programs be periodically provided to the team that is responsible for the compilation of the SEFA. This will allow for a more comprehensive understanding of grant activity and the ability to better review and assess the completeness and accuracy reported for these programs on NES’s year-end SEFA. One means by which this might be accomplished is to develop a checklist of anticipated awards in advance of the year and also complete an interim SEFA to identify inconsistencies earlier in the fiscal year.

Corrective Action Plan

2025-001 – Completeness of certain programs on the prior years’ Schedules of Expenditures of Federal Awards (SEFA) Cluster: Not applicable Sponsoring Agency: Tennessee Emergency Management Agency Award Name: Presidential Disaster Declaration for Severe Storms, Straight-line Winds, and Flooding May 3-4, 2020; Presidential Disaster Declaration for COVID-19 beginning January 2020 Award Number: FEMA-4550-DR-TN; FEMA-4514-DR-TN Assistance Listing Title: Disaster Grants – Public Assistance (Presidentially Declared Disasters) Assistance Listing Number: 97.036 Award Year: 2022, 2024 Pass-through entity: Not applicable A reconciliation process was implemented by the Electric Power Board of the Metropolitan Government of Nashville and Davidson County (the “Board” or “NES”) in FY2025, the result of which was the discovery of the understatement referenced in the finding. FEMA expenses are now reconciled to, and obligation dates retrieved from, the Federal FEMA Grants Portal to ensure project expenses are accurately reported in the proper fiscal year. Further, NES leadership and staff have been trained on the new policies and procedures, with trainings occurring in October and November 2025. The Corporate Controller, Controls and Compliance Manager, and their respective teams will meet on a quarterly basis, beginning in December 2025, to discuss SEFA activities to ensure future SEFA reports are complete. For inquiries regarding this finding, please contact Tabitha Beach at tbeach@nespower.com who is responsible for the corrective action.

Categories

Reporting

Other Findings in this Audit

  • 1210738 2025-001
    Material Weakness Repeat
  • 1210739 2025-001
    Material Weakness Repeat
  • 1210740 2025-001
    Material Weakness Repeat
  • 1210741 2025-001
    Material Weakness Repeat
  • 1210742 2025-001
    Material Weakness Repeat
  • 1210743 2025-001
    Material Weakness Repeat
  • 1210744 2025-001
    Material Weakness Repeat
  • 1210745 2025-001
    Material Weakness Repeat
  • 1210747 2025-002
    Material Weakness Repeat
  • 1210748 2025-002
    Material Weakness Repeat
  • 1210749 2025-002
    Material Weakness Repeat
  • 1210750 2025-002
    Material Weakness Repeat
  • 1210751 2025-002
    Material Weakness Repeat
  • 1210752 2025-002
    Material Weakness Repeat
  • 1210753 2025-002
    Material Weakness Repeat
  • 1210754 2025-002
    Material Weakness Repeat
  • 1210755 2025-002
    Material Weakness Repeat
  • 1210756 2025-002
    Material Weakness Repeat
  • 1210757 2025-002
    Material Weakness Repeat
  • 1210758 2025-002
    Material Weakness Repeat
  • 1210759 2025-002
    Material Weakness Repeat
  • 1210760 2025-002
    Material Weakness Repeat
  • 1210761 2025-002
    Material Weakness Repeat
  • 1210762 2025-002
    Material Weakness Repeat
  • 1210763 2025-002
    Material Weakness Repeat

Programs in Audit

ALN Program Name Expenditures
97.036 DISASTER GRANTS - PUBLIC ASSISTANCE (PRESIDENTIALLY DECLARED DISASTERS) $5.90M