Finding 35342 (2022-002)

Finding 2022-002 - Preparation of the Schedule of Expenditures of Federal Awards Department of Treasury COVID-19 - Coronavirus State and Local Fiscal Recovery Funds Assistance Listing #21.027 Significant Deficiency Criteria: Title 2 Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance) requires the System to prepare a schedule of expenditures of federal awards (Schedule). 2 CFR 200.303(a) establishes that the auditee must establish and maintain effective internal control over the federal award in compliance with federal statutes, regulations, and conditions of the federal award. Condition: Inadequate controls exist over the preparation of the Schedule specific to expenditure activity for the MMC- Dickinson subsidiary that was acquired in 2022 to allow for the timely completion of a complete and accurate Schedule. Consequently, certain MMC Dickinson expenditures were erroneously omitted from the preliminary Schedule. Cause: The System acquired MMC-Dickinson during 2022 and has not yet fully implemented existing System internal controls to the new subsidiary. Effect: Management identified additional MMC-Dickinson expenditures that were added to the Schedule late in the audit process. Questioned costs: None reported. Context: Approximately $480,000 of expenditures in relations to total expenditures of approximately $800,000 under assistance listing number 21.027 COVID-19 Coronavirus State and Local Fiscal Recovery Funds for the year-ended December 31, 2022, were originally omitted from the preliminary Schedule. Additionally, approximately $665,000 in expenditures from other programs was originally omitted from the preliminary Schedule and approximately $345,000 of expenditures were removed from the preliminary Schedule. These changes were not identified in a timely manner resulting in delays in completing the System Single Audit. Repeat finding from prior year: Not for the System but Yes, for 2021 Single Audit of MMC-Dickinson See prior year finding 2021-003. Recommendation: We recommend that management enhance its controls over the Schedule to ensure they include MMC-Dickinson and future acquisition to ensure timely accurate completion of the Schedule. Views of responsible officials and planned corrective actions: Management agrees with this finding. Please refer to pages 64 and 65 for the Corrective Action Plan