Finding Text
Item 2022-001 ?Schedule of Expenditures of Federal Awards (SEFA) Reporting Awarding Agency: U.S. Department of Housing and Urban Development Federal Program: 14.228 ? COVID-19 Community Development Block Grants/State?s Program and Non-Entitlement Grants in Hawaii Federal Award Identification Number: MSC221029-CV Grant Period: June 2022 to July 2023 Criteria: 2 CFR 200.510(b) requires the auditee to prepare a SEFA that must contain all federal awards expended during the period. Additionally, 2 CFR 200.514(a) states audits must cover the entire operations of the auditee based on the audits prepared and filed with the government, and that the financial statements and schedule of expenditures of Federal awards must be for the same audit period. Condition: We determined a federal award under SEMI Foundation with current period expenditures of $240,245 was improperly excluded from the auditee prepared SEFA. Cause: The financial statements of the Group are consolidated and include SEMI Foundation. As a result, the SEFA should also include SEMI Foundation?s federal expenditures. The Group maintains a system of controls designed to flag federal awards, but the award was mistakenly excluded from the SEFA because management did not initially believe the federal award was subject to audit in the current period on a stand-alone basis for SEMI Foundation. Current period federal expenditures for SEMI Foundation were below the audit threshold, but the SEFA should have included federal expenditures of both SEMI and SEMI Foundation. Effect: The SEFA was incomplete and impacted federal audit applicability determinations as well as the auditors? major program determination. Questioned Cost: None Context: The improperly excluded expenditures were only applicable to 1 out of 4 federal awards reported on the SEFA, and represented approximately 2 percent of total reported federal expenditures for the year ended December 31, 2022. Repeat Finding: No Recommendation: We recommend for management to implement processes to ensure the SEFA includes all federal expenditures for entities covered in its consolidated financial statements, which is currently SEMI and SEMI Foundation. Views of Responsible Official: SEMI concurs with this finding and will evaluate current period expenditures of federal awards on a consolidated basis going forward.