Finding Text
Finding 2022-002: Tracking of Federal Expenses and Preparation of the Schedule of Expenditures
of Federal Awards (SEFA)
Criteria: Title 2 CFR 200 Section 200.510 “Financial Statements” requires recipients of Federal funds
to prepare a SEFA for the period covered by the auditee's financial statements which must include the
total Federal awards expended. Additionally, in accordance with CFR 200.303, the non-Federal entity
must: Establish and maintain effective internal control over the Federal award that provides reasonable
assurance that the non-Federal entity is managing the Federal award in compliance with Federal
statutes, regulations, and the terms and conditions of the Federal award. These internal controls
should be in compliance with guidance in “Standards for Internal Control in the Federal Government”
issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”
issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
Condition: USTTI experienced difficulty in preparing and ensuring that all Federal expenditures were
identified, categorized and included in the SEFA. Due to the amount of program codes in the
accounting system, it was difficult to identify which subprogram codes related to the various Federal
programs. Additionally, we noted that indirect costs reported to the Federal granting agencies were not
properly calculated. The condition impacted the entire SEFA which is considered to be a systematic
problem. Cause: The high volume of subprogram codes were contributing factors to the error as well as
improper calculation of the indirect rate on the grants.
Effect: USTTI was unable to prepare the Schedule of Expenditures of Federal Awards.
Questioned Costs: None.
Context: USTTI was unable to complete its SEFA. As it has never prepared a SEFA in the past, the
condition appears to be systemic in nature.
Identification as a Repeat Finding, if Applicable: Not applicable.
Recommendation: We recommend USTTI prepare its SEFA on a quarterly basis and it should be
reviewed and approved by an individual in a supervisory capacity. The SEFA should be prepared in
accordance with the regulations under Title 2 U.S. Code of Federal Regulations Part 200, Uniform
Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform
Guidance). USTTI should enhance the review process to ensure the amounts agree to its reported
expenses. Additionally, USTTI should review its indirect rate calculation (i.e. ensuring components are
correctly identified and the mathematical calculations are accurate) to verify it is not charging over its
actual indirect rate.