Finding 2024-004: Schedule of Expenditures of Federal Awards (SEFA) – Material Weakness
Condition:
While performing our audit procedures, we noted that CAFB included the a $5 million grant from Fairfax
County on their SEFA even though CAFB is considered a beneficiary related to this grant.
Views of Responsible Officials and Planned Corrective Actions:
As stated in the report, the Organization respectfully disagrees with both the substance and the severity
of the finding.
In RSM’s proposal to the Organization, the firm indicates that it offers proactive advice to its clients:
“Specialists
RSM has a deep bench of specialists locally and nationwide available to advise CAFB and
the engagement team on issues as they arise. Relevant specialists cover areas such as:
unrelated business income from alternative investments, multi-state taxation, Federal single
audits, and information technology.
Proactive resolution of accounting issues
We find that year-round communication and a proactive approach to accounting issues help
clients avoid surprises at the end of the audit process. For this reason, we encourage clients
to call us to discuss new transactions as they arise.” [emphasis added]
We agree that the independent auditor cannot be part of the Organization’s internal controls. In this
instance, the Organization conducted its own research into the nature of the beneficiary agreement and
reached a conclusion that it should not be included on the SEFA. During audit planning, we discussed this
position with the audit partner and manager who recommended that it should be included on the SEFA.
Following the resignation of the engagement partner and manager, a new resource assigned to conclude
our engagement by the firm disagreed with that position and raised this finding. Had the initial audit team
remained and we excluded the grant, we assume that we would have received a finding for its exclusion.
As to the severity of the finding, we disagree that the instance rises to the level of a material weakness.
Although we concede the amount of the award ($5 million) is significant, its inclusion/exclusion from the
SEFA did not impact the selection of major programs and was a singular decision-making instance of an
unusual form of award, irrespective of the amount involved.
As for corrective action, considering the infrequency of beneficiary agreement awards to non-profit
organizations, it is improbable that the Organization will receive such an award again. Nevertheless, if
the Organization encounters an unusual transaction or award, we will continue to perform our own
research on the award/transaction and form our independent conclusion (as we did in this instance) and
refrain from taking actions that might imply the independent auditor is part of the Organization’s internal
control structure.Anticipated Completion Date:
February 2025