Finding Text
Finding 2024-003: Reportable finding considered a significant deficiency - Inaccurate and Incomplete Schedule of Expenditures of Federal Awards (SEFA)
Program name: Child and Adult Care Food Program Assistance Listing: 10.558
Federal awarding agency: U.S. Department of Agriculture (USDA)
Pass-through Entity: Maryland State Department of Education, District of Columbia Education Office
Criteria: In accordance with 2 CFR 200.510(b), the auditee must prepare a complete and accurate Schedule of Expenditures of Federal Awards (SEFA) that includes the total federal awards expended for each federal program, the assistance listing number (ALN), the name of the federal agency, and the pass-through entity identifying number. Accurate SEFA reporting is essential to support the auditor’s responsibility under 2 CFR 200.518 major program determination and for federal oversight.
Condition: The Organization failed to include two federal pass-through awards received from state and local governmental entities in prior years’ SEFAs. These awards were only identified as federal during the current audit year. Furthermore, when the awards were initially included in the current year’s SEFA, they were incorrectly classified under ALN 10.555 (National School Lunch Program). After additional inquiry and evaluation, they were determined to fall under ALN 10.558 (Child and Adult Care Food Program). The Organization was unable to locate specific subaward agreements; only a master service agreement from the state government was available.
Cause: There were deficiencies in the Organization’s internal controls over SEFA preparation, specifically in identifying, classifying, and documenting pass-through federal awards. The absence of award documentation and misclassification of the assistance listing number further indicate inadequate review and verification procedures.
Effect: Incomplete and inaccurate SEFA reporting may lead to noncompliance with Uniform Guidance requirements and increases the risk of omitted or misclassified programs subject to audit. Misreporting ALNs may also hinder proper audit coverage and oversight by federal and pass-through entities.
Repeat finding: This is not a repeat finding.
Questioned costs: There are no questioned costs associated with this finding.
Perspective: This issue affected two federal awards and represents a systemic control issue over SEFA preparation. There is a reasonable possibility that similar issues could recur if not addressed.
Recommendation: We recommend that the Organization:
• Implement procedures to require written documentation (e.g., subaward agreements) for all federal pass-through funding received.
• Enhance internal controls over the SEFA preparation process to ensure federal programs are accurately identified, classified, and reported, including verification of ALNs and funding sources.
• Designate responsibility within the finance team for verifying the federal nature of all awards and ensure ongoing training on SEFA and Uniform Guidance requirements.
Management’s response and corrective action plan (unaudited): See corrective action plan.