Finding 554824 (2023-008)

Material Weakness
Requirement
L
Questioned Costs
-
Year
2023
Accepted
2025-04-11
Audit: 353407
Organization: City of Cortland (NY)

AI Summary

  • Core Issue: The City failed to prepare a complete and accurate Schedule of Expenditures of Federal Awards (SEFA), leading to material misstatements and omissions of federal programs.
  • Impacted Requirements: Compliance with Uniform Guidance is at risk, as the City did not properly identify federal funds, affecting the accuracy of grant expenditure reporting.
  • Recommended Follow-Up: The City should establish procedures to accurately track federal awards and ensure the SEFA is complete and correct before future audits.

Finding Text

Federal Award Findings and Questioned Costs - Continued Finding 2023-008 Issue: Identification of Federal Awards and Preparation of a Complete and Accurate Schedule of Expenditures of Federal Awards (SEFA) Classification: Material Weakness Federal Agency: U.S. Department of Housing and Urban Development Federal Program: Community Development Block Grants/State's Program and Non-Entitlement Grants in Hawaii Assistance Listing Number: 14.228 Pass-Through Agency: NYS Office of Community Renewal Criteria: The Uniform Guidance requires the auditee to prepare a SEFA for the period covered by the auditee’s financial statement. It is the responsibility of the auditee's management to design and implement internal controls that provide reasonable assurance over the completeness and accuracy of the SEFA. The SEFA is the basis for the auditor’s identification of major programs. Condition: The City's initial SEFA provided for the audit was incomplete and contained inaccurate program expenditure amounts. In particular, there were multiple federal programs that were materially misstated; including the following major federal program for the year under audit: 1. ALN 14.228 Community Development Block Grants/State's Program and Non-Entitlement Grants in Hawaii In addition, there were multiple federal programs that were not identified on the initial SEFA for the year under audit: 1. ALN 20.600 / 20.616 Highway Safety Cluster 2. ALN 66.818 Brownfield Multipurpose, Assessment, Revolving Loan Fund, and Cleanup Cooperative Agreements 3. ALN 66.458 Capitalization Grants for Clean Water State Revolving Funds 4. ALN 93.568 Low-Income Home Energy Assistance 5. ALN 97.039 (COVID-19) Disaster Grants - Public Assistance (Presidentially Declared Disasters) Cause:The City does not have a method to accurately track the related expenditures for reporting. Effect or Potential Effect: A Uniform Guidance compliance audit is based on the premise that management must comply with federal statutes, regulations and the terms and conditions of the federal awards it receives. Without identifying the funds as federal, the auditee may not have complied with those requirements. In addition, there is increased risk regarding the accurate reporting of grant expenditures and noncompliance with policies and procedures surrounding the recording of federal awards. Questioned Costs:None. Context:The City was aware of the requirement to prepare a SEFA prior to the audit; however, they were not able to accumulate the appropriate records to correctly identify the source of funding for all ongoing projects. In addition, management was unable to accurately determine the amounts to be reported on the SEFA in accordance with 2 CFR §200.502. The adjustments to the SEFA amounted to an increase in Total Federal Expenditures reported of $253,510. Repeat Finding:This finding is not a repeat finding. Recommendation: We recommend the City develop and implement procedures to ensure that information related to all federal awards is accumulated to assist in the preparation of the SEFA. In addition, we recommend management of the City verify the completeness and accuracy of the amounts reported on the SEFA. Views of Responsible Officials of the Auditee:The City agrees with the finding.

Corrective Action Plan

Financial Statement Finding: 2023-008 Identification of Federal Awards and Preparation of a Complete and Accurate Schedule of Expenditures of Federal Awards (SEFA) Criteria: The Uniform Guidance requires the auditee to prepare a SEFA for the period covered by the auditee’s financial statement. It is the responsibility of the auditee's management to design and implement internal controlsthat provide reasonable assurance over the completeness and accuracy of the SEFA. The SEFA is the basis for the auditor’s identification of major programs. Cause/Condition: The City does not have a method to accurately track the related expenditures for reporting. The City's initial SEFA provided for the audit was incomplete and contained inaccurate program expenditure amounts. In particular, there were multiple federal programs that were materially misstated; including the following major federal program for the year under audit: 1. ALN 14.228 Community Development Block Grants/State's Program and Non-Entitlement Grants in Hawaii In addition, there were multiple federal programs that were not identified on the initial SEFA for the year under audit: 1. ALN 20.600 / 20.616 Highway Safety Cluster 2. ALN 66.818 Brownfield Multipurpose, Assessment, Revolving Loan Fund, and Cleanup Cooperative Agreements 3. ALN 66.458 Capitalization Grants for Clean Water State Revolving Funds 4. ALN 93.568 Low-Income Home Energy Assistance 5. ALN 97.039 (COVID-19) Disaster Grants - Public Assistance (Presidentially Declared Disasters) Effect: A Uniform Guidance compliance audit is based on the premise that management must comply with federal statutes, regulations and the terms and conditions of the federal awards it receives. Without identifying the funds as federal, the auditee may not have complied with those requirements. In addition, there is increased risk regarding the accurate reporting of grant expenditures and noncompliance with policies and procedures surrounding the recording of federal awards. Recommendation: We recommend the City develop and implement procedures to ensure that information related to all federal awards is accumulated to assist in the preparation of the SEFA. In addition, we recommend management of the City verify the completeness and accuracy of the amounts reported on the SEFA. Response: The City agrees with the finding. Corrective Action Plan: The City will include tracking of federal awards in the Capital Project tracking process. Capital projects will be reflected in a separate budget alongside the operational budget beginning in FY 2026. Anticipated Completed Date: July 31, 2025 for the tracking process; December 20, 2025 for the budget. Responsible Contact Person: Elizabeth Greenwood, Director of Administration & Finance

Categories

Reporting

Other Findings in this Audit

  • 554823 2023-007
    Material Weakness
  • 554825 2023-007
    Material Weakness
  • 554826 2023-007
    Material Weakness
  • 554827 2023-008
    Material Weakness
  • 554828 2023-007
    Material Weakness
  • 554829 2023-008
    Material Weakness
  • 554830 2023-007
    Material Weakness
  • 554831 2023-008
    Material Weakness
  • 554832 2023-007
    Material Weakness
  • 554833 2023-008
    Material Weakness
  • 554834 2023-007
    Material Weakness
  • 554835 2023-008
    Material Weakness
  • 1131265 2023-007
    Material Weakness
  • 1131266 2023-008
    Material Weakness
  • 1131267 2023-007
    Material Weakness
  • 1131268 2023-007
    Material Weakness
  • 1131269 2023-008
    Material Weakness
  • 1131270 2023-007
    Material Weakness
  • 1131271 2023-008
    Material Weakness
  • 1131272 2023-007
    Material Weakness
  • 1131273 2023-008
    Material Weakness
  • 1131274 2023-007
    Material Weakness
  • 1131275 2023-008
    Material Weakness
  • 1131276 2023-007
    Material Weakness
  • 1131277 2023-008
    Material Weakness

Programs in Audit

ALN Program Name Expenditures
21.027 Coronavirus State and Local Fiscal Recovery Funds $946,030
14.228 Community Development Block Grants/state's Program and Non-Entitlement Grants in Hawaii $117,108
66.818 Brownfields Multipurpose, Assessment, Revolving Loan Fund, and Cleanup Cooperative Agreements $63,235
97.036 Disaster Grants - Public Assistance (presidentially Declared Disasters) $46,378
66.458 Clean Water State Revolving Fund $39,381
97.044 Assistance to Firefighters Grant $35,777
93.568 Low-Income Home Energy Assistance $8,361
20.600 State and Community Highway Safety $5,781
16.607 Bulletproof Vest Partnership Program $5,000
20.616 National Priority Safety Programs $1,386