Finding 1229739 (2025-001)

Finding 2025-001- Failure to Maintain Adequate Controls Over Federal Award Accounting and Reporting Criteria: Management is responsible for establishing and maintaining internal controls to ensure federal awards are properly identified, accumulated, monitored, and reported. Such controls should provide reasonable assurance that the Organization can determine whether it is subject to the Uniform Guidance audit requirements and prepare a complete and accurate Schedule of Expenditures of Federal Awards (SEFA). Condition: The Organization did not maintain adequate procedures to identify and track federal expenditures throughout the year or to monitor compliance with Single Audit reporting requirements. As a result, management had not identified that federal expenditures exceeded the threshold requiring a Single Audit and had not prepared a complete SEFA prior to commencement of the audit. The SEFA was subsequently compiled during the audit process. Effect: As a result of the deficiency, management did not timely identify that the Organization was subject to the Uniform Guidance audit requirements and did not prepare a complete Schedule of Expenditures of Federal Awards (SEFA) prior to the audit. Consequently, there was an increased risk that federal expenditures could be omitted from or inaccurately reported in federally required reporting and that management would not timely comply with federal reporting and audit requirements. Cause: The deficiency resulted from a combination of inadequate formalized procedures and turnover within the accounting department during the year. The Organization had not established sufficient written policies and controls to identify and monitor federal awards, assess Single Audit applicability, or prepare and review a complete SEFA. As key accounting personnel transitioned, the lack of documented processes and specialized knowledge related to Uniform Guidance requirements hindered management's ability to effectively track federal expenditures and timely identify applicable federal reporting obligations. Recommendation: We recommend management establish and document procedures to ensure federal awards are appropriately identified, accumulated, and monitored throughout the year. Controls should include: 1. Annual assessment of Single Audit applicability. 2. Timely preparation and review of the SEFA. 3. Periodic management review of federal award activity. 4. Training for personnel responsible for federal grant accounting and reporting. Views of Responsible Officials and Planned Corrective Action: Management agrees with the finding and plans to implement procedures to identify and monitor federal awards throughout the year, assess Single Audit applicability annually, and prepare and review the SEFA on a timely basis.