Finding Text
Finding 2025-10: Internal Control over SEFA Preparation Condition: During our audit, we noted that an expenditure related to the American Rescue Plan Act (ARPA) program was recorded and included in the prior year SEFA but was subsequently voided after year-end. Management recorded a prior period adjustment to correct fund balance, however, the SEFA for the year ended November 30, 2024, was overstated by $203,554. Criteria: Management is responsible for establishing and maintaining effective internal controls over financial reporting, including the accurate preparation of the Schedule of Expenditures of Federal Awards. This includes ensuring expenditures are recorded in the proper period and that the SEFA is complete and accurate. Cause: The County did not have effective controls in place to ensure adequate review of the SEFA for accuracy and completeness, including identification of post–year-end adjustments impacting reported federal expenditures. Effect: The prior year SEFA included an overstatement of federal expenditures. While the misstatement was not material to the SEFA, it indicates a deficiency in internal control over financial reporting and federal reporting. The misstatement represents approximately 2% of the ARPA program expenditures and total SEFA. Recommendation: Management should increase controls over grant tracking and reporting to ensure the SEFA is accurate. Management’s Response: We agree with the finding and will develop a corrective action plan.