Finding Text
Material Adjusting Entries and Potential Impact on SEFA Accuracy
Program Federal awards internal control deficiency that could impact the accuracy and completeness of federal awards reported on the Schedule of Expenditures of Federal Awards and have an impact on determination of major programs.
Type: Material Weakness in Internal Control over federal awards.
Criteria: The Schedule of Expenditures of Federal Awards is considered a required element of external financial reporting under SAS 115 and supplementary information required by Uniform Guidance. It is used by grantors and pass-through grantors to monitor federal awards and by auditee auditors to select major programs.
Condition: The District’s listing of grants to prepare the SEFA was not accurately reported due to exclusion of indirect costs and unrecorded receivables and deferrals for certain federal awards.
Context: The federal grants identified on the District’s listing of grants was understated by $1,078,725.
Cause: Due in part to turnover in the Director of Business and Finance position and lack of appropriate and timely monthly close process, the reconciliations were not completed in a timely manner.
Effect: Material misstatement of the SEFA is more than probable.
Recommendation: The District should create a template to reconcile federal grant activity to the general ledger revenue, expenditure and deferral balances.
View of Responsible Officials and Planned Corrective Action: Management agrees with the finding. See corrective action plan.