Finding Text
2025-001: Significant Deficiency and Noncompliance: Cut-off Errors in Preparing the SEFA U.S. Department of Transportation Airport Improvement Program, Infrastructure Investment and Jobs Act Programs, and COVID-19 Airports Programs Federal Assistance Listing Number (ALN): 20.106 Federal Award Years: 2023-2025 Criteria: The schedule of expenditures of federal awards (“SEFA”) is required to be prepared on a basis consistent with the financial statements. Expenditures of federal awards are to be reported on the accrual basis of accounting and should be reported on the SEFA when incurred. Condition: The City reported expenditures on the fiscal year 2025 SEFA that were incurred in other fiscal years. For two grants that were closed out and finalized during fiscal year 2025, the City included certain expenditures incurred prior to January 1, 2025 on its 2025 SEFA, representing adjustments of amounts previously reported on the 2023 and 2024 SEFAs to account for the finalized grant numbers. The adjustment amounts on the 2025 SEFA for these two grants do not represent any actual expenditures incurred in 2025. Therefore, they were not reported on the SEFA in a manner consistent with the fiscal year in which they were recognized as expenditures in the financial statements. This resulted in a net effect of $32,815 of allowable costs reported on the fiscal year 2025 SEFA which were incurred in previous fiscal years. Cause: There was an inadequate review of the allocation of the invoices related to the grants to ensure that the proper amounts were disclosed in the 2023 and 2024 SEFAs, therefore requiring a correction on the 2025 SEFA. Effect or potential effect: Inaccurate reporting of expenses can result in actions taken by oversight agencies, which could impact future funding. Inaccurate reporting could also result in material misstatements of the SEFA, the improper identification of major programs for audit, or unallowable costs reported in error. Questioned costs: None. Context: The City reported an adjustment of $47,216 for the Airport Improvement Program - Reconstruct T-Hangar Taxilanes grant to recognize additional expenses that were not previously reported on the 2023 and 2024 SEFAs. The City reported a negative adjustment of $14,401 for the Bipartisan Infrastructure Law (BIL), Airport Infrastructure Grant (AIG) to reduce the expenses previously reported on the 2023 and 2024 SEFAs for this grant. Identification as a repeat finding, if applicable: Not a repeat finding. Recommendation: We recommend the City implement procedures to ensure proper cut-off is achieved in reporting expenditures on the SEFA, and that a detailed reconciliation is performed between the general ledger and expenditures reported to the granting agency. Views of responsible officials: Management agrees with the finding.