Finding 501031 (2023-003)

OTHER - BASIS OF ACCOUNTING – SIGNIFICANT DEFICIENCY WIOA CLUSTER: WIOA ADULT PROGRAM - ALN 17.258 WIOA YOUTH ACTIVITIES - ALN 17.259 WIOA DISLOCATED WORKER FORMULA GRANTS - ALN 17.278 STATE AGENCY: NEW YORK STATE DEPARTMENT OF LABOR IDENTIFICATION NUMBER(S): VARIOUS AND AA-36336-21-55-A-36 FEDERAL AGENCY: U.S. DEPARTMENT OF LABOR COUNTY AGENCY: SUFFFOLK COUNTY DEPARTMENT OF LABOR 1. CRITERIA Basis of Accounting — Uniform Guidance states the basis of accounting used may be a special purpose framework. However, it does state that the determination of when an award is expended must be based on when the activity related to the federal award occurs. Uniform Guidance also states for grants, cost reimbursement contracts, cooperative agreements, and direct appropriation type of contracts, the federal expenditure or expense should be reported when the transaction occurs. Uniform Guidance further states, the auditee should also be able to reconcile amounts presented in the financial statements to related amounts in the Schedule of Expenditures of Federal Awards (the “SEFA”). 2. CONDITION/PERSPECTIVE The Suffolk County Department of Labor (the “Department”) receives WIOA Adult; Youth and Dislocated Worker Formula Grants from New York State Department of Labor (the “Agency”). The Department reports to the Agency on an accrual basis, as required by the Agency. The County’s SEFA is presented on the accrual basis of accounting. The Department provides all supporting documents to the Agency for reimbursement. We noted that the Department included expenditures in the amount of $373,855, which were incurred and dated in the prior year. The Department recorded the expenditures and revenue in the 2023 financial statements. These expenditures were also added to the SEFA in calendar year ended December 31, 2023. 3. CAUSE The Departments did not ensure that all program expenditures were reported in the correct year in the County’s SEFA. 4. EFFECT The Pass-through agency may consider Suffolk County noncompliant. 5. REPEAT FINDING No. 6. RECOMMENDATION We recommend the Department report expenditures on the SEFA on the accrual basis of accounting, which is the basis the County utilizes for other federal programs. 7. QUESTIONED COST Cannot be determined. 8. VIEWS OF RESPONSIBLE OFFICIAL The Department will enact additional processes to ensure that expenditures and revenues are reported in the year in which they incurred. As noted in the Department’s Corrective Action Plan, throughout the year, the Department will regularly reconcile vouchers to ensure that expenditures and associated revenue are reported in the correct year on the SEFA. Two staff members in the Department (one as the primary, the other as the alternate) will be assigned the responsibility of tracking the SEFA reconciliation process. When preparing the annual SEFA, the Department will reconcile expenditure reports with the expenditure reported on the annual SEFA. During year-end processing, the Department, when entering vouchers into the financial system, will ensure items to be accrued will contain the letter “A” as a prefix to the voucher number. The Department will also check to ensure all items that should be accrued, are in fact accrued prior to year-end closing. In addition, the Department will confirm the date entered in the financial system, reflects the proper year in which the expenditure and associated revenue should be recorded.