Finding Text
MATERIAL WEAKNESS IN INTERNAL CONTROL OVER COMPLIANCE – SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
2023-003 Reporting Compliance Requirement
Criteria – 2 CFR § 200.510 requires that the City prepare financial statements that reflect its financial position, results of operations or changes in net position, and, where appropriate, cash flows for the fiscal year audited, including the Schedule of Expenditures of Federal Awards (SEFA) for the year ended December 31, 2023, which must include the total federal awards expended as determined in accordance with 2 CFR § 200.502. Management is responsible for establishing and maintaining effective internal controls over compliance with requirements applicable to federal programs, including separately tracking federal expenditures within the finance system to provide for accurate preparation of the SEFA.
Condition – During our audit, we noted the City did not have sufficient controls in place to ensure completeness of the SEFA and compliance with this requirement. The City’s SEFA was understated by $1,189,917 in federal expenditures related to the Highway Planning and Construction and COVID-19 – Coronavirus State and Local Fiscal Recovery Funds federal programs.
Questioned Costs – Not applicable.
Context – On the December 31, 2023 SEFA, $1,189,917 of $1,197,438 was initially unreported.
Repeat Finding – This is a current year finding.
Cause – This was an oversight by the City’s management.
Effect – An incomplete SEFA could result in incorrect major program determination and could be seen as a violation of federal award agreements.
Recommendation – We recommend that the City review its internal control procedures over reporting and verify completeness of expenditures reported on the SEFA in the future.
View of Responsible Official and Planned Corrective Actions – The City agrees with the finding. The City has separately issued a Corrective Action Plan related to this finding.