Finding Text
Statement of Condition During our review of the Schedule of Expenditures of Federal Awards (?SEFA?), we noted the following: Expenditures totaling $377,172 were coded to the Coronavirus Relief Program federal assistance listing number, but originated from a different federal assistance listing number; and $335,756 of expenditures within the SEFA for the year ended June 30, 2022 were expended during the year ended June 30, 2021. However, the related expenditures were all allowable and were properly vouchered for reimbursement to the funder during the correct program year. Criteria or Specific Requirement The SEFA is required to be reported on the accrual basis of accounting, whereby expenditures are reported when incurred. Additionally, expenditures should be classified under the federal assistance listing number applicable to the source of funding and the specific program. Questioned Costs All costs were valid and expended over the terms of the applicable contracts, and therefore, there are no questioned costs. Additionally, the federal assistance listing number coding was corrected in the accompanying SEFA. Effect Island Harvest did not achieve proper cut-off of expenditure reporting on the SEFA as required by the Uniform Guidance and the reporting requirements established by the Federal Agency. Cause As a result of the COVID-19 pandemic, Island Harvest experienced an unprecedented expansion in its programs related to emergency food distributions funded by the COVID Relief Program. The ultimate source of such funding, and the correct federal assistance listing number, was not clearly identified by funders, which led to the inaccurate federal assistance listing number coding. Additionally, the contracts for these programs spanned multiple fiscal years. All required supporting documentation was properly submitted to funders to obtain reimbursement. However, the claim and supporting documentation was voluminous and there was significant communication with Island Harvest?s funders regarding allowability of certain expenditures, which significantly delayed the filing and recording process. As a result, certain claims were completed and submitted after the audit for the year ended June 30, 2021 was issued. Since the exact amount of these claims could not be determined, the accrual of these claims and reporting of the related expenditures in the SEFA did not occur for the year ended June 30, 2021. Recommendation Island Harvest should establish controls to ensure that costs related to federal programs are reviewed as part of the year-end closing procedures, and to ensure expenditures of federal awards are reflected on the SEFA on the accrual basis, in the year costs were incurred. Additionally, Island Harvest should ensure all federal assistance listing numbers are accurate. If contracts with funders do not list a federal assistance listing number, Island Harvest should confirm the federal assistance listing number with the funding source. Views of Responsible Officials and Corrective Action Plan Island Harvest will continue to reinforce internal controls to ensure that costs related to federal programs are reviewed as part of year-end closing procedures. Island Harvest will work with legislative partners to ensure expenditures of federal awards are reflected on the SEFA on the accrual basis, in the year costs were incurred. To properly code all federal assistance listing numbers, Island Harvest will work with its funders until the confirmed federal assistance listing number is properly reflected in the SEFA.