Finding Text
Preparation of SEFA Criteria: In accordance with 2 CFR §200.510(b), the auditee is responsible for preparing a Schedule of Expenditures of Federal Awards (SEFA) that is presented fairly in all material respects in relation to the financial statements and includes complete and accurate information for each federal program. This includes identifying all federal expenditures, Assistance Listing Numbers (ALNs), pass-through information, and amounts provided to subrecipients, where applicable. Condition: Management prepared the initial Schedule of Expenditures of Federal Awards; however, the schedule contained numerous material errors and omissions requiring multiple revisions during the audit. Among the deficiencies identified was the omission of material amounts passed through to subrecipients. Additional errors included inaccurate federal expenditure amounts and other information required for proper presentation of the SEFA. As a result, the SEFA required significant auditor assistance and several iterations before it was materially accurate. Cause: Management did not maintain effective internal controls over the preparation and review of the SEFA. Specifically, there was not an adequate process to identify all federal expenditures, accumulate complete program information, identify subrecipient expenditures, and perform a detailed review of the schedule prior to submission for audit. Effect: The SEFA initially submitted for audit was materially misstated. The omissions and inaccuracies, including the exclusion of material subrecipient expenditures, could have resulted in an incorrect determination of major programs, inaccurate federal reporting, and noncompliance with Uniform Guidance reporting requirements had they not been detected during the audit. Questioned Costs: None Recommendations: We recommend management strengthen its controls over the preparation and review of the SEFA by implementing formal procedures to: Reconcile federal expenditures to the general ledger and supporting grant records. Verify that all federal programs, Assistance Listing Numbers, and pass-through information are complete and accurate. Identify and report all amounts provided to subrecipients. Perform and document an independent supervisory review of the completed SEFA before it is provided for audit. Management's View: Management agrees with this finding