Finding Text
Inaccurate SEFA and Internal Control over Compliance Finding Type: Material weakness in internal control over compliance and noncompliance with laws and regulations. Program(s) Impacted: 84.367 Title II, Part A Condition: The District did not record expenditures to the 2020-21 or 2021-22 grants in a timely manner, and internal controls over expenditures charged were not in place throughout the period during which such charges were incurred. Expenditures reported for the Title II, Part A grant in their submission to the Michigan Department of Education?s Financial Information Database (FID) did not agree with expenditures reported in the schedule of expenditures of Federal awards (SEFA) for the same period, as the District did not provide accurate information to the auditors nor did they prepare an accurate SEFA. Criteria: 2 CFR 200.510(b) requires that an auditee prepare a SEFA for the period covered by the financial statements which must include the total Federal awards expended for each program. In addition, 2 CFR 200.303 requires that an auditee establish and maintain effective internal control over the Federal award that provides reasonable assurance of compliance with Federal statutes, regulations, and the terms and conditions of the award. Cause: The District incurred expenditures throughout the fiscal year, however, did not determine Title II, Part A charges until prior to submission of the Final Expenditure Report for the grant, and did not inform their auditors of differences between federal revenue recognized and expenditure recorded during the same period. Effect: The District?s SEFA was not accurate for the fiscal year ending June 30, 2021, and adjustments were needed in the current year to correct Title II, Part A expenditures previously recorded. In addition, the FID submission to MDE reflected revenue recorded to Title II, Part A that did not agree with expenditures recorded to the associated grant code. Questioned Costs: $0 Recommendation: We recommend that the District record expenditures to federal grants throughout the fiscal year, as such expenditures are incurred, and prepare an accurate SEFA for auditor review. View of Responsible Officials: The District agrees with the recommendation and will implement internal controls to address the stated condition.