Finding Text
Finding 2023-004 – Schedule of Expenditures of Federal Awards (SEFA) Preparation, Internal Control
Identification of the federal program
Assistance listing number and title: 93.493 Congressional Directives
Agency: U.S. Department of Health and Human Services
Federal award identification number (FAIN): H79FG000996
Federal award year: 2023
Criteria or specific requirement (including statutory, regulatory or other citation)
Section 200.303 of the Uniform Guidance states the following regarding internal control: “The non-Federal entity must: (a) 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. These internal controls should be in compliance with guidance in ‘Standards for Internal Control in the Federal Government’ issued by the Comptroller General of the United States or the ‘Internal Control Integrated Framework,’ issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).”
Title 2, Subtitle A Chapter II Part 200 Subpart F Section 200.510(b) Schedule of expenditures of Federal awards. The auditee must prepare a schedule of expenditures of Federal awards for the period covered by the auditee’s financial statements which must include the total federal awards expended as determined in accordance with Section 200.502. Section 200.502(a) states the determination of when a federal award is expended must be based on when the activity related to the federal award occurs.
Condition
During the audit, significant adjustments were made to the SEFA in order to reconcile to the underlying detail and supporting documentation.
Cause
Management did not accurately reflect the expenditures related to one grant on the SEFA resulting in a material change to the major program 93.493 Congressional Directives. Management did not have effective internal controls in place to ensure accurate and complete reporting of the federal program on the SEFA.
Effect or potential effect
This resulted in an overstatement of the expenditures reported in the initial SEFA. Amounts initially included on the initial SEFA have not yet been requested for reimbursement.
Questioned costs
None.
Context
The System was unable to provide supporting documentation for two 2 out of 5 samples pertaining to test and conference fees which were initially selected for testing of direct costs. These expenses were initially based upon calculations and due to turnover, management did not have an understanding of the detailed requirements that comprised the expenses. Management did a complete review of the expenditures for this grant and ultimately concluded to remove these expenditures from the SEFA totaling $112,298. These expenditures have not been submitted for reimbursement, and thus not reflected as questioned costs.
Identification as a repeat finding, if applicable
This is not a repeat finding.
Recommendation
The System should develop and implement effective internal controls to ensure the SEFA only includes expenditures which are adequately supported, and for which the System has been reimbursed or intends to submit for reimbursement.
View of responsible officials
Management will institute additional review procedures and levels of review to SEFA preparation process. Grant project team will review allowable expenditures under grant specific and federal grant requirements prior to SEFA preparation. Management and grant project team will review SEFA amounts prior to submission to auditors.