Finding Text
2023-005 - Internal Control Over Compliance and Compliance – Reporting (Preparation of the Schedule of Expenditures of Federal Awards)
Program- U.S. Department of Energy, National Forum for State and Territorial Chief Executives - HHS OA, Yr 10 and Yr 11, National Forum
ALN: 93.528, Award #: 2U98OA09028, Award Year: 09/01/2022 – 09/29/2023
Program- U.S. Department of Health and Human Services, Strengthening Public Health Systems and Services through National Partnerships to Improve and Protect the Nation’s Health
ALN: 93.421, Award #: Various, Award Year: 08/01/2018 – 07/31/2023
Criteria – 2 CFR Section §200.510(b) states in part: “The auditee must also prepare a schedule of expenditures of Federal Awards (SEFA) for the period covered by the auditee’s financial statements which must include the total Federal awards expended as determined in accordance with CFR Section §200.502 Basis for determining Federal awards expended.” The schedule must provide total Federal awards expended for each individual Federal program.
In accordance with §200.302 Financial Management, a non-federal entity’s financial management systems, including records documenting compliance with federal statutes, regulations, and the terms and conditions of the federal award, must be sufficient to permit the preparation of reports required by general and program-specific terms and conditions; and the tracing of funds to a level of expenditures adequate to establish that such funds have been used according to the federal statutes, regulations, and the terms and conditions of the federal award. The financial management
system of each non-federal entity must provide for the following:
(1) Identification, in its accounts, of all federal awards received and expended and the federal programs under which they were received.
(2) Accurate, current, and complete disclosure of the financial results of each federal award or program in accordance with the reporting requirements set forth in §200.327 Financial Reporting and §200.328 Monitoring and Reporting Program Performance.
(3) Records that identify adequately the source and application of funds for federally-funded activities.
(4) Effective control over, and accountability for, all funds, property, and other assets.
Condition – The internal controls established for the review and approval of the SEFA to ensure its completeness and accuracy did not operate as designed. During our testing of management’s preparation of the SEFA, it was determined that some federal award expenditures were excluded from the original SEFA provided by management. Management subsequently corrected the SEFA to reflect the inclusion of the federal expenditures. In addition, several versions were received from management prior to the final SEFA.
Questioned Costs – None.
Context – This is a condition identified per review of NGA Center’s compliance with specified requirements.
Cause – NGA Center only prepares the SEFA once a year in conjunction with the annual audit. This annual process lends itself to less familiarity with the processes necessary to provide a complete SEFA reporting package and turnover in key personnel historically involved in the SEFA process negatively impacted the process.
Effect – Failure to present the SEFA correctly can result in incorrect major program selection and incorrect reporting to federal agencies. The finding identified was not of a magnitude to impact BDO’s selection of major programs.
Repeat Finding – This is not a repeat finding.
Recommendation - We recommend management continue to focus on training for both preparer and reviewer of the SEFA to ensure the documented policies and procedures can be performed as prescribed to comply with Section §200.510(b). This will ensure that the SEFA provides all relevant
information as prescribed.
Views of Responsible Officials – NGA Center agrees with the finding and recommendations set forth within and has developed a corrective action plan to address the instances of noncompliance identified and lapses in prescribed internal controls.