Finding Text
Schedule of Expenditures of Federal Awards (SEFA) Not Accurately Reported
Condition: Federal expenditures were over reported on the SEFA due to state
expenditures being classified as federal expenditures, specifically related to its
funding agreement with the Commonwealth of Kentucky Contract PON2 736-
2200002279.
Criteria: The SEFA should only include federal expenditures as required by the
Uniform Guidance.
Cause: The Organization has a funding agreement with the Commonwealth of
Kentucky (Contract PON2 736-2200002279), under this funding agreement, the
Organization was expected to receive 85% from federal sources and 15% from state
sources. As such, the Organization allocated the total expenditures incurred under
the contract in accordance with the funding agreement.
Effect: The SEFA over reported federal expenditures by $581,771.
Recommendation: We recommend management review their policies and
procedures over SEFA preparation to ensure sufficient internal controls are
implemented. In circumstances where there is any uncertainty regarding the source
of the funds (for example, funding agreements with multiple sources), the
Organization should contact the related agency and confirm the sources of the
funding to verify the amounts reported on the SEFA are accurately presented.
Views of Responsible Officials and Planned Corrective Action: As part of its
processes and procedures to prepare the SEFA, management will contact the
funding source to verify the source of the funds to ensure the accuracy of reported
federal expenditures. Additionally, for the specific funding agreement, management
will reach out to the related funding source to communicate the discrepancy.