Finding Text
Finding No. 2022-001 ? Schedule of Expenditures of Federal Awards (SEFA) Criteria or Specific Requirement The SEFA, which is prepared by the auditee and considered supplementary information to the financial statements, is a key part of the reporting package required by the Uniform Guidance. The SEFA also serves as the primary basis that auditors use to determine which programs will be audited as part of the single audit. Therefore, the auditee?s responsibility for preparing an accurate and complete SEFA is critical. Specifically, ?200.510(b) of the Uniform Guidance requires the auditee to prepare a SEFA for the period covered by the auditee?s financial statements which must include the total federal awards expended as determined in accordance with ?200.502 of the Uniform Guidance, ?Basis for Determining Federal Awards Expended.? The auditee?s responsibility to prepare a complete and accurate SEFA is the foundation for a smooth audit. If the SEFA includes errors or omissions, it will surely result in audit inefficiencies, duplicate audit efforts by auditors and revision of the risk assessment process in order to determine major programs, the potential for audit restatement, and/or additional audit costs. Condition As discussed above, the SEFA is expenditure driven as opposed to revenue driven. The District initially reported the federal expenditures for ALN 12.600 - Defense Community Infrastructure Pilot program and ALN 97.039 ? Hazard Mitigation Grant program based on the federal funds received as opposed to expenditures incurred during the fiscal year 2022. The following material adjustments were made to the SEFA to comply with the Uniform Guidance: Program Name Original Reported Amount Adjustments Made Revised Expenditures ALN 12.600 ? Defense Community Infrastructure Pilot $643,635 $3,586,498 $4,230,133 ALN 97.039 ? Hazard Mitigation Grant $583,020 $255,883 $838,903 Cause and Effect The potential causes for the above errors are as follows: ? Lack of training. ? Lack of controls to ascertain that all federal expenditures are properly included in the SEFA. Questioned Costs Not applicable. Recommendation We recommend the District revisit its current SEFA preparation process and develop a detailed SEFA preparation checklist to comply with the Uniform Guidance requirements. The District should consider incorporating the SEFA preparation checklist within the monthly and year-end closing process. This will help ensure the completeness and accuracy of the SEFA and help monitor compliance with federal guidelines.