FAC Explorer

Finding 32599 (2022-001)

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Requirement
P
Questioned Costs
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Year
2022
Accepted
2023-08-20
Audit: 28323
Organization: Semi (CA)
Auditor: Bpm LLP

AI Summary

  • Core Issue: A federal award from SEMI Foundation, totaling $240,245, was mistakenly left out of the Schedule of Expenditures of Federal Awards (SEFA).
  • Impacted Requirements: The SEFA must include all federal awards expended during the audit period, as per 2 CFR 200.510(b) and 2 CFR 200.514(a).
  • Recommended Follow-Up: Management should establish processes to ensure all federal expenditures from consolidated entities, like SEMI and SEMI Foundation, are included in future SEFA reports.

Finding Text

Item 2022-001 ?Schedule of Expenditures of Federal Awards (SEFA) Reporting Awarding Agency: U.S. Department of Housing and Urban Development Federal Program: 14.228 ? COVID-19 Community Development Block Grants/State?s Program and Non-Entitlement Grants in Hawaii Federal Award Identification Number: MSC221029-CV Grant Period: June 2022 to July 2023 Criteria: 2 CFR 200.510(b) requires the auditee to prepare a SEFA that must contain all federal awards expended during the period. Additionally, 2 CFR 200.514(a) states audits must cover the entire operations of the auditee based on the audits prepared and filed with the government, and that the financial statements and schedule of expenditures of Federal awards must be for the same audit period. Condition: We determined a federal award under SEMI Foundation with current period expenditures of $240,245 was improperly excluded from the auditee prepared SEFA. Cause: The financial statements of the Group are consolidated and include SEMI Foundation. As a result, the SEFA should also include SEMI Foundation?s federal expenditures. The Group maintains a system of controls designed to flag federal awards, but the award was mistakenly excluded from the SEFA because management did not initially believe the federal award was subject to audit in the current period on a stand-alone basis for SEMI Foundation. Current period federal expenditures for SEMI Foundation were below the audit threshold, but the SEFA should have included federal expenditures of both SEMI and SEMI Foundation. Effect: The SEFA was incomplete and impacted federal audit applicability determinations as well as the auditors? major program determination. Questioned Cost: None Context: The improperly excluded expenditures were only applicable to 1 out of 4 federal awards reported on the SEFA, and represented approximately 2 percent of total reported federal expenditures for the year ended December 31, 2022. Repeat Finding: No Recommendation: We recommend for management to implement processes to ensure the SEFA includes all federal expenditures for entities covered in its consolidated financial statements, which is currently SEMI and SEMI Foundation. Views of Responsible Official: SEMI concurs with this finding and will evaluate current period expenditures of federal awards on a consolidated basis going forward.

Corrective Action Plan

Finding Reference Number: 2022-001 Description of Finding: The auditee omitted a federal award under SEMI Foundation with current period expenditures of $240,245 in its preparation of the 2022 SEFA. The SEFA was, therefore, incomplete and impacted the federal audit applicability determination as well as the auditors? major program determination. Corrective Action: The Organization concurs with this finding and provided the current period expenditures of federal awards on a consolidated basis. The organization provided specific information to support its position. We misinterpreted the reporting obligation for the award on the SEFA. We initially planned to first report the award when cumulative expenditures recognized under the award reached the reporting threshold on a stand-alone basis. We stand corrected on our understanding of its obligation to report on the SEFA report and evaluated the consolidated federal expenditures of all awards and their lifetime value against reporting threshold. Each award included in the evaluation that meets or exceeds the reporting threshold is to be first reported in the year of grant. In compliance with 2 CFR 200.514, we recognize that the SEFA report must be looked at the group level and cover the entire operations of SEMI and be presented in relation to the financial statements as a whole. We have coordinated with the appropriate staff to update their understanding and have reinforced our report review process accordingly. In addition, we will include this information in our periodic staff trainings to ensure future compliance. Name of Responsible Person: Kevin Bauer Anticipated Completion Date: The Organization anticipates completing the corrective action by July 31, 2023.

Categories

Reporting

Other Findings in this Audit

Programs in Audit

ALN Program Name Expenditures
12.431 Basic Scientific Research $6.62M
12.800 Air Force Defense Research Sciences Program $5.86M
14.228 Covid-19 Community Development Block Grants/state's Program and Non-Entitlement Grants in Hawaii $240,245