Finding 400876 (2023-001)

Material Weakness
Requirement
N
Questioned Costs
-
Year
2023
Accepted
2024-06-14
Audit: 308903
Organization: Sustainable Northwest (OR)

AI Summary

  • Core Issue: There is a material weakness in how the Organization prepares the schedule of expenditures of federal awards (SEFA), leading to incorrect reporting.
  • Impacted Requirements: The Organization failed to properly identify and account for federal awards as required by Uniform Guidance, resulting in significant adjustments.
  • Recommended Follow-Up: Implement better procedures to accurately capture all federal award activities and ensure that federal cost reimbursement revenue matches SEFA reports for completeness.

Finding Text

Finding # 2023-001: Type: Material weakness over preparation of schedule of expenditures of federal awards (SEFA). Assistance Listing: 10.937 Partnerships for Climate-Smart Commodities Criteria/Requirement The Organization should have procedures in place to properly identify and account for federal awards that are subject to Uniform Guidance. Condition/Context: The Organization did not correctly identify federal expenditures that should or should not be reported on the SEFA and significant adjustments were required. Cause: Payroll expenses by funding source were tracked outside of the accounting system’s payroll module. Reports that were generated from the accounting system to be used in the SEFA preparation were not complete since payroll costs were improperly excluded. In addition, certain federal agreements that are exempt from the Uniform Guidance were included in the SEFA. Effect: Major programs for the Single Audit may not be correctly identified and audited. Questioned Costs: None. Recommendation: The Organization should implement additional procedures and controls to accurately capture all activity under federal awards in preparing the SEFA. Federal cost reimbursement revenue should be compared to amounts reported on the SEFA to ensure completeness and accuracy. Management’s Response: The Organization agrees with the auditor’s recommendation. At the time of this audit’s publishing, the Organization has implemented the payroll module in the accounting system so that expenses are tracked in one system.

Corrective Action Plan

Finding # 2023-001 Material Weakness over Preparation of Schedule of Federal Expenditures (SEFA) The Organization did not identify all federal expenditures and significant adjustments were required to the SEFA prepared by management. Corrective Action: The Organization agrees with and independently identified this issue and proactively implemented a new payroll process as of January 2024 in order to address this issue. This will ensure all expenses are tracked in one system for all purposes. In addition the Organization created a new grant tracking field in the chart of accounts which tracks the Assistance Listing numbers of all grants, allowing for the automated creation of the SEFA, as well as providing an internal control to ensure that revenue recognition policies and relevant federal guidelines are correctly applied to all funding sources. Anticipated Completion Date: January 2024

Categories

Reporting Cash Management Material Weakness

Other Findings in this Audit

Programs in Audit

ALN Program Name Expenditures
10.937 Partnerships for Climate-Smart Commodities $824,423
10.723 Community Project Funds - Congressionally Directed Spending $355,648
15.608 Fish and Wildlife Management Assistance $177,936
10.351 Rural Business Development Grant $84,229
15.514 Reclamation States Emergency Drought Relief $71,712
10.719 Infrastructure Investment and Jobs Act Firewood Bank Program $64,000
11.307 Economic Adjustment Assistance Program $42,549
10.674 Wood Utilization Assistance $32,877
10.912 Environmental Quality Incentives Program $18,333