Finding Text
Criteria: Management is responsible for preparing a complete and accurate Schedule of Expenditures of Federal Awards in accordance with the requirements of the Uniform Guidance. The SEFA should include all federal awards expended during the audit period, including federal awards received directly from federal agencies and awards passed through from nonfederal entities. Management is also responsible for maintaining adequate internal controls over the preparation and review of the SEFA to ensure that all federal award expenditures, including noncash assistance such as donated commodities, are properly identified, accumulated, valued, and reported in the correct period. Condition: During audit procedures over the SEFA, we noted that management’s initial SEFA was incomplete and inaccurate. Specifically, omitted federal grants were identified by the audit team during the audit that were not included in the SEFA prepared by management. Additionally, inaccuracies were noted in the quantity of commodities used when comparing the inventory usage records submitted to the Louisiana Department of Agriculture and Forestry to the commodity usage reported within the SEFA. As a result, audit adjustments were required to properly present the SEFA. Cause: The Food Bank did not have sufficient controls in place to ensure that all federal awards were identified and included in the SEFA. Additionally, management’s review process over noncash assistance and commodity usage reporting was not designed or operating effectively to ensure that amounts reported on the SEFA agreed to underlying inventory and program records submitted to the pass-through agency. Effect: Failure to properly identify and report all federal awards increases the risk that the SEFA may be materially misstated. Inaccurate SEFA reporting could also result in improper major program determination under the Uniform Guidance and could affect the scope of the Single Audit. Additionally, inaccuracies in commodity usage reporting increase the risk that federal expenditures related to noncash assistance are not complete, accurate, or properly supported. Context: The audit team identified the omitted Child and Adult Care Program (ALN 10.558) and the Summer Food Service Program (ALN 10.559) federal grants that were not included in management’s prepared SEFA. The audit team also identified differences between the quantity of commodities used per the records submitted to the Louisiana Department of Agriculture and Forestry and the quantity of commodity used in determining the amount of expenditures to be reported within the SEFA for 17 out of 20 inventory items included on the USDA Commodity Program Monthly Inventory Report. Recommendations: We recommend management strengthen controls over the preparation and review of the SEFA. Such controls should include, but not be limited to: • Maintaining a comprehensive listing of all federal awards received, including direct awards and awards passed through from state or other nonfederal entities; • Reviewing grant agreements, award notices, reimbursement requests, cash receipts, and correspondence from pass-through agencies to identify all federal funding sources; • Implementing a formal SEFA preparation checklist to ensure all federal award activity is evaluated for inclusion; • Reconciling SEFA amounts to the general ledger, grant records, inventory records, and reports submitted to pass-through agencies; • Performing a detailed review of noncash assistance, including donated commodities, to ensure quantities and valuations are complete, accurate, and properly supported; • Assigning responsibility for preparation and independent review of the SEFA; and • Retaining documentation supporting the final SEFA amounts reported.