Finding Text
Condition: A material error in the Schedule of Expenditures of Federal Awards (SEFA) for the year ended June 30, 2023, has been identified. The SEFA initially reported incorrect amounts due to inaccuracies in the accounting reports tracking federal expenditures. Refer to Section III Findings and Questioned Costs-Major Federal Programs for additional information. Criteria: According to Title 2 CFR § 200.303(a), the non-Federal entity must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award.
Condition: Fraternity House, Inc’ internal controls are not adequate to ensure that the Schedule of Expenditures of Federal Awards are accurately reported. Fraternity house, Inc., did not accurately report federal funds received and expended through the County contracts.
Cause: The internal controls over the Schedule of Expenditures of Federal Awards reporting processes were not adequately enforced to ensure accurate preparation of the SEFA.
Effect: Fraternity House, Inc., did not properly report their federal expenditures. The incorrect reporting could result in improper use of federal funds and noncompliance with federal regulations.
Recommendation: We recommend that Fraternity House, Inc. strengthen its internal control processes over the preparation of the SEFA. Specifically, we suggest implementing the following measures:
1. Establish procedures to ensure the timely and accurate reconciliation of federal expenditures with the accounting records.
2. Conduct a thorough review of the SEFA by knowledgeable personnel before submission.
3. Provide additional training to staff involved in the preparation of the SEFA on the requirements of the Uniform Guidance and proper accounting practices for federal awards.
Management’s Response: Fraternity House, Inc. concurs with the finding and has begun implementing corrective actions. The finance department is in the process of enhancing the internal control procedures to ensure accurate and complete reporting of federal expenditures. Additionally, training sessions are being scheduled for the relevant personnel to address the identified issues and prevent future occurrences.