Finding Text
Condition:
During the audit procedures over the Schedule of Expenditures of Federal Awards (SEFA) prepared by the Corporation for 2024, it was identified that the expenditures of this program received through a local state entity were not included in the SEFA. Also, it was determined that the expenditures for 2022 and 2023 were excluded from the corresponding SEFA. See related information on Note 11 to the SEFA.
Criteria:
2 CFR §200.510 Financial Statements (b), states that 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. At a minimum, the schedule must: (1) list individual Federal Programs by Federal agency, (2) for Federal awards received as a subrecipient, the name of the Pass-Through Entity and identifying number assigned by the Pass-Through Entity must be included, (3) provide total Federal awards expended for each individual Federal program and the Assistance Listing number (ALN), (4) include the total amount provided to subrecipients from each Federal program, (5) for loan or loan guarantee programs identify in the notes to the schedule the balances outstanding at the end of the audit period, and (6) include notes describing the significant accounting policies used in preparing the schedule.
Cause:
The cause was an oversight in realizing the source of the funds received through a local government entity. Consequently, the expenditures of the federal award were not included in the SEFA.
Effect:
The SEFA for 2024 was corrected before issuance. However, as stated in Note 11 to the SEFA, the expenditures for 2023 and 2022 were added to the 2024 reporting period, following the advice, upon consultation, of an officer of the U.S. Department of the Treasury, the federal grantor agency. Notwithstanding, the Corporation complies with the requirements for the expenditure of the federal award, as established by the Uniform Guidance and as required and monitored by the local pass-through entity.
Questioned Cost:
None.
Recommendation:
We recommend management to include additional procedures to identify the source of funds received from pass-through entities and to consider it on each preparation of the SEFA.
Management Response:
Management acknowledges that expenditures related to the Coronavirus State and Local Fiscal Recovery Funds (ALN 21.027), received through a local governmental entity, were initially omitted from the Schedule of Expenditures of Federal Awards (SEFA) in fiscal years 2022 and 2023. These expenditures were subsequently reported in the 2024 SEFA following consultation with an officer of the U.S. Department of the Treasury.
We emphasize that this matter pertains solely to the classification and reporting timeline of the expenditures in the SEFA and does not reflect any noncompliance with the underlying federal requirements for the use or management of the funds. At all times, the Corporation has maintained appropriate internal controls over federal program expenditures and adhered to the eligibility and documentation standards required by the Uniform Guidance and the respective pass-through entity.
The root cause of the observation, as correctly noted, was a reporting oversight stemming from the indirect receipt of federal funds. In response, management is implementing enhanced controls and formal procedures to ensure that all funding sources, particularly those received through intermediary or pass-through entities, are correctly identified and appropriately classified for reporting. These measures include:
• Expanding documentation requests to verify funding sources.
• Maintaining ongoing dialogue with pass-through entities to confirm federal assistance classifications.
The Corporation remains fully committed to robust financial stewardship, regulatory compliance, and transparent federal award reporting.