Finding 496753 (2023-003)

Department of Homeland Security, State of South Dakota Office of Emergency Management, 97.036, FEMA-DR-4664-SD, FEMA-DR-4440-SD Disaster Grants – Public Assistance Material Weakness in Internal Control over Compliance Activities Allowed or Unallowed, Allowable Costs and Cost Principles Criteria: 2 CFR 200.303(a) establishes that the auditee must establish and maintain effective internal control over the federal award that provides assurance that the entity is managing the federal award in compliance with federal statutes, regulations, and conditions of the federal award. Condition: The Cooperative utilized a fringe benefits spreadsheet provided by FEMA and the information was not calculated correctly. Cause: The Cooperative did not formally review the spreadsheet to ensure information was accurate and up to date. Effect: There is a reasonable possibility that the Cooperative could have failed to identify any errors located within the fringe benefit spreadsheet. Questioned Costs: No questioned costs over $25,000. Context/Sampling: A nonstatistical sample of 60 transactions were selected for testing, which accounted for $1,063,076 out of $1,784,924 total federal program expenditures of which $1,338,693 were submitted for reimbursement. Repeat Finding form Prior Year: No Recommendation: We recommend the Cooperative review procedures surrounding fringe benefits to ensure the process includes a formal review of the spreadsheets prior to submission to the federal agency. Views of Responsible Officials: Management agrees with the finding.