Finding 957593 (2023-001)

Material Weakness
Requirement
C
Questioned Costs
-
Year
2023
Accepted
2024-03-19

AI Summary

  • Core Issue: The Agency's SEFA report was incomplete and inaccurate, missing eight federal programs and containing significant discrepancies in financial data.
  • Impacted Requirements: Non-compliance with 2 CFR Section 200.302 and 200.303, which mandate accurate financial disclosures and effective internal controls over federal awards.
  • Recommended Follow-Up: Implement timely oversight of federal grant expenditures and SEFA preparation to ensure compliance and reduce the risk of material errors in financial statements.

Finding Text

Type of Finding: Material Weakness Criteria: 2 CFR Section 200.302 of the Uniform Guidance requires that a non-federal entity provide for accurate, current, and complete disclosure of the financial results of each Federal award or program. Additionally, 2 CFR Section 200.303 of the Uniform Guidance requires the non-Federal entity to 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. Condition: We identified the following issues during our audit procedures over the SEFA and federal grant expenditure reports (SEFA project rollout): The preliminary SEFA provided by the Agency excluded eight federal programs with approximately $779,000 of federal revenues. The preliminary SEFA provided by the Agency contained various inaccuracies for contract numbers and contract periods, which resulted in various corrections subsequent to receipt of the preliminary SEFA. Thirty-two project reports for cost reimbursable federal grants contained variances over $25,000 between federal revenues and expenditures. Through procedures performed in other audit areas, we identified approximately $908,000 of contract labor invoices and expenditures not accrued on the Agency’s consolidated financial statements and excluded from the preliminary SEFA. These expenditures were related to the Emergency Food and Shelter Program (EFSP) (ALN #97.024). The Agency received advanced funding throughout the year from FEMA for operating the Centro De Bienvenida (CDB). The complete and final reconciliation for federal grant deferred revenues to account for the balance of advanced funds was not timely provided at the start of audit fieldwork. Various adjustments were pending to deferred revenue accounts, specifically EFSP-allowable expenditures for the CDB and reversal of prior year deferred revenues for expenditures incurred in the current year. This resulted in approximately $490,000 of adjustments to deferred revenue accounts during the audit. The Agency identified approximately $123,000 of disallowed expenditures, which required reclassification from the CDB federal project code to general funds. This amount was not provided until after completion of the Agency’s expense receipt review project which was after the start of audit fieldwork. The specific issues and/or observations noted above included material adjustments proposed during the audit to properly reconcile the federal award expenditures and obtain a complete and accurate SEFA. These adjustments and findings also resulted in four versions of the SEFA received by the auditor throughout our audit procedures. Cause: Lack of timely review and oversight of federal project expenditures, including the SEFA rollout report. In addition, the preliminary SEFA and underlying support was not timely reviewed by management after it was prepared by accounting staff. Effect or potential effect: Not implementing a timely review of federal grant expenditures (SEFA rollout report) and deferred revenue reconciliations, including information contained in the SEFA, increases the risk of material errors to the consolidated financial statements that would not be detected by management in a timely manner. Recommendation: We recommend the Agency implement adequate and timely oversight of federal grant expenditures to ensure proper compliance with federal expenditure reporting and SEFA preparation. We understand that the agency’s federal grant budget significantly increased during the fiscal year with the operation of the CDB. Thus, it is expected that increased federal funding levels would require more levels oversight to ensure compliance with proper financial management of the grants. Repeat Finding: No Questioned Costs: None Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding. See Corrective Action Plan.

Categories

Reporting Internal Control / Segregation of Duties

Other Findings in this Audit

  • 381150 2023-001
    Material Weakness
  • 381151 2023-001
    Material Weakness
  • 381152 2023-001
    Material Weakness
  • 381153 2023-001
    Material Weakness
  • 381154 2023-001
    Material Weakness
  • 381155 2023-001
    Material Weakness
  • 381156 2023-001
    Material Weakness
  • 381157 2023-003
    Significant Deficiency
  • 381158 2023-003
    Significant Deficiency
  • 381159 2023-003
    Significant Deficiency
  • 381160 2023-003
    Significant Deficiency
  • 381161 2023-003
    Significant Deficiency
  • 381162 2023-003
    Significant Deficiency
  • 381163 2023-003
    Significant Deficiency
  • 957592 2023-001
    Material Weakness
  • 957594 2023-001
    Material Weakness
  • 957595 2023-001
    Material Weakness
  • 957596 2023-001
    Material Weakness
  • 957597 2023-001
    Material Weakness
  • 957598 2023-001
    Material Weakness
  • 957599 2023-003
    Significant Deficiency
  • 957600 2023-003
    Significant Deficiency
  • 957601 2023-003
    Significant Deficiency
  • 957602 2023-003
    Significant Deficiency
  • 957603 2023-003
    Significant Deficiency
  • 957604 2023-003
    Significant Deficiency
  • 957605 2023-003
    Significant Deficiency

Programs in Audit

ALN Program Name Expenditures
97.024 Emergency Food and Shelter National Board Program $34.32M
93.567 Refugee and Entrant Assistance_voluntary Agency Programs $740,828
93.870 Maternal, Infant and Early Childhood Home Visiting Grant $537,192
19.510 U.s. Refugee Admissions Program $386,090
93.566 Refugee and Entrant Assistance_state Administered Programs $237,040
97.010 Citizenship Education and Training $124,374
21.009 Volunteer Income Tax Assistance (vita) Matching Grant Program $84,310
93.676 Unaccompanied Alien Children Program $65,752
93.556 Promoting Safe and Stable Families $61,628
93.576 Refugee and Entrant Assistance_discretionary Grants $51,096
94.002 Retired and Senior Volunteer Program $48,739
93.598 Services to Victims of A Severe Form of Trafficking $42,029
21.027 Coronavirus State and Local Fiscal Recovery Funds $22,152
16.575 Crime Victim Assistance $15,554
21.006 Tax Counseling for the Elderly $6,457
14.231 Emergency Solutions Grant Program $4,945
94.011 Foster Grandparent Program $4,881