Finding 42655 (2022-003)

Finding 2022-003 ? Schedule of Expenditures of Federal Awards (SEFA) ? Significant Deficiency Program: All Federal Programs Compliance Requirement: Reporting Condition: The expenses and awards reported on the Schedule of Expenditures of Federal Awards (SEFA) were revised during the single audit. Criteria: Internal controls should be in place that provide reasonable assurance that the SEFA is complete and accurate, prior to the start of the audit. Cause: The SEFA did not include federal awards that were passed through from the County and all assistance listing numbers identified in grant agreements. Effect: The expenses included on the SEFA were revised during the audit, which could have resulted in the auditor not selecting the correct program for testing during the single audit and could have resulted in the single audit not satisfying the requirements of the Uniform Guidance. Context: The City excluded three federal awards from the U.S. Department of Homeland Security as these awards were passed through from Yuba County, and one federal award from the U.S. Department of Housing and Urban Development that was funded from the CARES Act. There were also two U.S. Department of Transportation grants passed through from the State Office of Traffic Safety that were each awarded for two different assistance listing (AL) numbers. The City had reported both grants under one of the AL numbers (20.608), resulting in this program?s expenditures being overstated on the SEFA and the other AL number (20.600) being improperly excluded from the SEFA for major program determination. Recommendation: We recommend that the City consider all grants where the source is federal when reconciling to the SEFA. The City should communicate with pass-through entities and granting agencies to determine if a grant is federal if it is not clear after review of the grant agreement. The City should also document all assistance listing numbers on grants identified as federal. The City should also ensure grant revenue is properly identified as federal versus state when recording revenue in the general ledger. City?s Response: