Finding 1214922 (2025-001)

SD2025-001 – INACCURATE REPORTING OF THE SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS AND STATE FINANCIAL ASSISTANCE Criteria Title 2 U.S, Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (“Uniform Guidance”) requires that the recipient of grant awards must be able to prepare an accurate schedule of expenditures and be able to identify in its accounts all federal awards and state assistance received and expended. Condition The City met the audit reporting thresholds for both a Federal Single Audit (“Uniform Guidance”) and a State Single Audit (Florida Single Audit Act) for the fiscal year ended September 30, 2025. Accordingly, the City provided the Schedule of Expenditures of Federal Awards and State Financial Assistance (“SEFA”) to the auditors. As a result of the audit procedures performed, six (6) necessary corrections totaling approximately $674,000 were made to various grant programs between the initial SEFA provided and the final version. Additionally, adjustments were made to the City’s trial balance accounts after the SEFA was fully reconciled. These changes required the auditors to modify their planned procedures under the Uniform Guidance, including the reassessment of the major program determination and related testing. Cause There was a lack of adequate review controls over the preparation and review of the SEFA. Additionally, in one instance, a department within the City entered into an agreement involving federal funding without the initial knowledge of the City's finance department. This delay in communication contributed to the necessary revisions to the SEFA. Effect The SEFA was not accurately prepared and could result in incorrect reporting of expenditures to federal and state agencies. Additionally, because of the adjustments recorded, the auditors had to reevaluate the major program determination, which resulted in an additional federal program selected as major for testing in the single audit. Recommendation We recommend that the staff responsible for the preparation of the SEFA and monitoring of Federal and State Awards evaluate the controls and staff responsibilities in place to ensure federal grant expenditures are accurately captured. Additionally, the SEFA should be reviewed and approved timely by management personnel identified by the City who possesses the adequate knowledge and expertise. Such review and approval should take place during the City's financial close process.