Finding Text
Finding Number: 2022-SA1 Material Weakness – Internal Control over Compliance Federal Award: No. 64.024 VA Homeless Providers Grant and Per Diem Program Federal Agency: U.S. Veterans Administration Pass-Through Entity: Not applicable Repeat Finding: Yes – 2021-SA1 Criteria or Specific Requirement: U.S. Code of Federal Regulations, Title 2, Part 200, section 510(b) Schedule of Expenditures of Federal Awards requires recipients of federal awards to prepare a schedule of expenditures of federal awards (SEFA) for the period covered by the entity’s financial statements to accurately reflect federal awards expended for individual federal programs. Condition: During the year ended June 30, 2022, program income expended was not identified and inappropriately excluded from the SEFA. In addition, the underlying detail of expenditures did not tie without exception to the SEFA amounts and multiple adjustments to the SEFA were made. Cause: The error was primarily due to factors beyond the control of current management, including poorly designed policies and procedures, poor recordkeeping and a lack of understanding of the requirements for the reporting of federal expenditures on the SEFA. Effect or Potential Effect: Improper internal controls and reconciliations of the federal expenditures pose a risk for inaccuracies in SEFA reporting. Additionally, since the Organization’s SEFA serves as the basis in determining the audit scope, including the identification of major programs required to be audited in a given fiscal year, inaccuracies in the SEFA pose a risk of improper identification of major programs. Questioned Costs: Related questioned costs are unknown. Context: These issues stem from policies and procedures established by former key accounting personnel, predate current management’s oversight, and were therefore outside their direct control. Recommendation: The Organization should establish a more thorough internal review process to ensure the figures reported on the SEFA properly represent expenditures incurred in the Organization’s accounting software and is reconciled timely to the general ledger. The Organization should also take measures to train department personnel on the requirements for SEFA reporting to help ensure that the preparation of the SEFA report is accurate and ties to the general ledger. View of Responsible Officials: In response to Finding No. 2022-SA1, management agrees with the finding. Corrective actions were implemented in subsequent fiscal years. ALN numbers and federal expenditures are tracked by contract and reported on the Schedule of Expenditures of Federal Awards (SEFA) for each fiscal year and reconciled to the general ledger. Separate classes are utilized to track activity for individual federally funded contracts and grants.