Finding Text
Finding 2025-002: Preparation of the Schedule of Expenditures of Federal Awards (SEFA) Statement of Condition The Organization. did not provide a properly completed Schedule of Expenditures of Federal Awards (SEFA). Certain programs administered by the Organization were funded through a combination of federal and non-federal sources. The Organization had not identified the portion of expenditures attributable to federal awards prior to the commencement of audit fieldwork. As a result, the identification of federal expenditures and the amounts to be included in the SEFA occurred during the audit process rather than prior to the start of the audit. This resulted in delays in determining the complete population of federal expenditures and the programs subject to audit under the Uniform Guidance. Criteria Under 2 CFR §200.510(b) of the Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), auditees are responsible for preparing a Schedule of Expenditures of Federal Awards for the period covered by the financial statements. The SEFA must accurately present total federal expenditures for each federal program, including the Assistance Listing number and pass-through identifying information, where applicable. Cause The Organization does not have a formalized process to identify and track the federal portion of expenditures for programs funded through multiple sources during the fiscal year. As a result, management had not compiled or finalized the SEFA prior to the start of the audit. Effect The absence of a completed SEFA at the commencement of the audit delayed the auditor’s ability to determine the population of federal expenditures and identify major programs for testing under the Uniform Guidance. This resulted in additional time required during fieldwork to determine the appropriate amounts to include in the SEFA. Recommendation We recommend that management implement procedures to identify and track federal expenditures by Assistance Listing number throughout the year, particularly for programs with mixed funding sources. Management should prepare and review a complete and accurate SEFA prior to the start of the audit, including identification of federal funding components within blended funding streams. Establishing formal procedures for the preparation and review of the SEFA will help ensure compliance with 2 CFR §200.510(b) and support timely completion of the annual Single Audit. Views of Responsible Officials and Planned Corrective Actions Management agrees with the finding and recognizes the importance of preparing a complete and accurate Schedule of Expenditures of Federal Awards (SEFA) prior to the commencement of the annual audit in accordance with the requirements of 2 CFR §200.510(b). The finding resulted from the absence of a formalized process to consistently identify and document federal funding components within contracts funded through multiple revenue sources, including changes reflected in new and renewed County contracts. As a result, certain federal funding components were not identified during the initial preparation of the SEFA, requiring revisions during the audit. In response, management has implemented and will continue to enhance procedures to strengthen the preparation and review of the SEFA throughout the fiscal year. These corrective actions include: • Establishing forma procedures requiring the identification and documentation of Assistance Listing Numbers (ALNs) for all new contracts and contract renewals. • Tracking applicable federal funding and corresponding ALNs within the accounting system to support the accurate preparation and review of the SEFA. • Requiring the Controller to review all new and renewed contracts monthly to identify changes affecting federal funding and ensure the SEFA is updated accordingly. • Obtaining and maintaining timely ALN confirmations and supporting documentation for all applicable federal awards. • Preparing and reconciling the completed SEFA to supporting accounting records, funding documentation, and applicable federal and pass-through contracts prior to submission to the independent auditors. Management believes these corrective actions will strengthen internal controls over federal award reporting, improve the accuracy and completeness of the SEFA, and ensure future compliance with the requirements of 2 CFR §200.510(b).