Finding Text
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/States Program
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
responibility 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:
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, or had inaccurate amounts reported, on the initial
SEFA for the year under audit:
ALN 10.664 Cooperative Forestry Assistance - not identified
ALN 97.036 Disaster Grants - Public Assistance (Presidentially Declared Disasters) - inaccurate amounts reported
ALN 21.027 (COVID-19) Coronavirus State and Local Fiscal Recovery Funds - inaccurate amounts reported
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 received. 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 $366,330.
Repeat Finding: This 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.