Finding 1240504 (2024-007)

Material Weakness Repeat Finding

Requirement

Questioned Costs

Year

2024

Accepted

2026-10-15

Audit: 414961

Organization: COUNTY OF GALLATIN (MT)

Auditor: CARVER FLOREK & JAMES CPA'S

AI Summary

Core Issue: The County inaccurately reported federal expenditures on the Schedule of Expenditures of Federal Awards (SEFA) due to a loan agreement that was not removed after determining it would not be federally funded.
Impacted Requirements: The County failed to comply with Title 2 CFR Part 200, which mandates accurate preparation of the SEFA and effective internal controls over federal awards.
Recommended Follow-Up: Implement a review process to ensure any changes in funding sources are accurately reflected in the County's financial records, particularly the SEFA.

Finding Text

2024-007 Schedule of Expenditures of Federal Awards Preparation Federal Agency: U.S. Department of the Treasury Federal Program: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds Assistance Listing Number: 21.027 Compliance Requirement: Reporting - Schedule of Expenditures of Federal Awards Type of Finding: Significant Deficiency in Internal Control over Compliance Criteria: Title 2 of the Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.510(b), requires the auditee to prepare a schedule of expenditures of federal awards (SEFA) for the period covered by the auditee's finanical statements, including the total federal awards expended. Section 200.303 requires the auditee to establish and maintain effective internal control over federal awards. Condition: During our testing, we found an instance where the County had entered into an agreement to loan federal funds and subsequently determined that the loan would not be federally funded. The County did not remove this loan from the SEFA, that was initially provided for the audit. Cause: The County did not have a process to ensure that changes in funding source decisions were reflected in its financial information, including the SEFA. Effect: Federal expenditures reported on the SEFA were overstated prior to correction. An inaccurate SEFA could affect the determination of major programs and the accuracy of information reported to federal agencies. Questioned Costs: None. Context: We identified one loan agreement that remained on the SEFA as a federal expenditure after the County determinded that the loan would not be federally funded. Recommendation: We recommend that when decisions are made to change funding sources, the County conduct a thorough review to ensure the change is properly reflected in the County's financial information, including the SEFA. View of Responsible Officials: Please see the last page of this report for the response to this finding.

Corrective Action Plan

Finding 2024-007 Schedule of Expenditures of Federal Awards Preparation Responsible Individuals: Chief Financial Officer, Comptroller, Grants Manager Corrective Action Plan: The County agrees with the finding and will take the following actions: - Funding source changes. When a decision is made to change the funding source of a grant related expenditure, the party responsible for changing the funding source will notify Finance to ensure that the appropriate changes in accounting treatment are recognized. Finance will reclassify the expenditure in the general ledger. The Grants Department will update the grant's project ledger, the SEFA, and any affected federal reports. - SEFA preparation. The SEFA will be prepared from general ledger grant and project codes. It will be reconciled to the general ledger and to federal reports, such as the Treasury Project and Expenditure Report, before it is provided to the auditors. - Review. The Chief Financial Officer will review and sign the SEFA and its reconciliation. Anticipated Completion Date: The SEFA preparation procedure is effective for Fiscal Year Ended June 30, 2026 and will be applied to the FY 2025 SEFA by the time it is provided to the auditors on or before December 31, 2026.

Other Findings in this Audit

1240505 2024-008

Material Weakness Repeat

Programs in Audit

ALN	Program Name	Expenditures
20.933	NATIONAL INFRASTRUCTURE INVESTMENTS	$9.73M
21.027	CORONAVIRUS STATE AND LOCAL FISCAL RECOVERY FUNDS	$4.28M
20.106	AIRPORT IMPROVEMENT PROGRAM, INFRASTRUCTURE INVESTMENT AND JOBS ACT PROGRAMS, AND COVID-19 AIRPORTS PROGRAMS	$2.75M
93.268	IMMUNIZATION COOPERATIVE AGREEMENTS	$603,984
10.557	WIC SPECIAL SUPPLEMENTAL NUTRITION PROGRAM FOR WOMEN, INFANTS, AND CHILDREN	$404,834
93.505	AFFORDABLE CARE ACT (ACA) MATERNAL, INFANT, AND EARLY CHILDHOOD HOME VISITING PROGRAM	$385,574
97.067	HOMELAND SECURITY GRANT PROGRAM	$280,590
16.738	EDWARD BYRNE MEMORIAL JUSTICE ASSISTANCE GRANT PROGRAM	$273,253
21.032	LOCAL ASSISTANCE AND TRIBAL CONSISTENCY FUND	$257,800
15.916	OUTDOOR RECREATION ACQUISITION, DEVELOPMENT AND PLANNING	$142,349
97.042	EMERGENCY MANAGEMENT PERFORMANCE GRANTS	$132,954
93.069	PUBLIC HEALTH EMERGENCY PREPAREDNESS	$125,900
10.665	SCHOOLS AND ROADS - GRANTS TO STATES	$120,559
16.575	CRIME VICTIM ASSISTANCE	$116,117
93.994	MATERNAL AND CHILD HEALTH SERVICES BLOCK GRANT TO THE STATES	$109,730
16.710	PUBLIC SAFETY PARTNERSHIP AND COMMUNITY POLICING GRANTS	$104,931
93.354	PUBLIC HEALTH EMERGENCY RESPONSE: COOPERATIVE AGREEMENT FOR EMERGENCY RESPONSE: PUBLIC HEALTH CRISIS RESPONSE	$95,859
10.664	COOPERATIVE FORESTRY ASSISTANCE	$91,574
10.577	SNAP PARTNERSHIP GRANT	$77,407
93.917	HIV CARE FORMULA GRANTS	$60,173
90.404	HAVA ELECTION SECURITY GRANTS	$58,895
16.588	VIOLENCE AGAINST WOMEN FORMULA GRANTS	$54,819
93.959	BLOCK GRANTS FOR PREVENTION AND TREATMENT OF SUBSTANCE ABUSE	$33,334
14.228	COMMUNITY DEVELOPMENT BLOCK GRANTS/STATE'S PROGRAM AND NON-ENTITLEMENT GRANTS IN HAWAII	$25,000
93.898	CANCER PREVENTION AND CONTROL PROGRAMS FOR STATE, TERRITORIAL AND TRIBAL ORGANIZATIONS	$23,899
10.698	STATE & PRIVATE FORESTRY COOPERATIVE FIRE ASSISTANCE	$22,014
93.977	SEXUALLY TRANSMITTED DISEASES (STD) PREVENTION AND CONTROL GRANTS	$18,693
93.323	EPIDEMIOLOGY AND LABORATORY CAPACITY FOR INFECTIOUS DISEASES (ELC)	$18,600
93.870	MATERNAL, INFANT AND EARLY CHILDHOOD HOME VISITING GRANT	$13,546
93.136	INJURY PREVENTION AND CONTROL RESEARCH AND STATE AND COMMUNITY BASED PROGRAMS	$10,000
20.939	SAFE STREETS AND ROADS FOR ALL	$7,500
20.205	HIGHWAY PLANNING AND CONSTRUCTION	$6,493
97.039	HAZARD MITIGATION GRANT	$5,985
10.572	WIC FARMERS' MARKET NUTRITION PROGRAM (FMNP)	$5,238
93.391	ACTIVITIES TO SUPPORT STATE, TRIBAL, LOCAL AND TERRITORIAL (STLT) HEALTH DEPARTMENT RESPONSE TO PUBLIC HEALTH OR HEALTHCARE CRISES	$5,000
93.435	THE INNOVATIVE CARDIOVASCULAR HEALTH PROGRAM	$5,000
10.720	INFRASTRUCTURE INVESTMENT AND JOBS ACT COMMUNITY WILDFIRE DEFENSE GRANTS	$4,941
93.103	FOOD AND DRUG ADMINISTRATION RESEARCH	$386