Finding Text
2022-006 – Preparation of Schedule of Expenditures of Federal Awards (SEFA) (repeat)
Finding Type: Material Weakness in Internal Controls and Noncompliance (Reporting, Cash
Management and Allowable Costs/Cost Principles)
Federal Program: U.S. Department of Transportation – Airport Improvement Program (AL
#20.106); all project numbers and U.S. Department of Treasury – Coronavirus State and Local
Fiscal Recovery Funds (AL #21.027)
Criteria: The Code of Federal Regulations (CFR) Section 200.303(b) requires non-Federal entities
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 terms and conditions of the Federal award. CFR Section 200.502(a) states
that the determination of when a Federal award is expended should be based on when the activity
related to the Federal award occurs. Generally, the activity pertains to events that require the nonFederal entity to comply with Federal statutes, regulations, and the terms and conditions of Federal
awards, such as expenditure/expense transactions associated with grant awards. The County
reports expenditures on the SEFA when the expenditure has been incurred, or on the accrual basis
of accounting, in accordance with generally accepted accounting principles. CFR Section
200.510(b) 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 CFR Section 200.502(a), as stated above, and must reconcile amounts reported in the SEFA
to the amounts reported in the auditee’s financial statements.
Condition: The SEFA was not appropriately reconciled to federal grant revenues and expenditures
recorded in the financial statements. Changes were made to major program expenditures, as well
as expenditures of other programs, during the closing process and during the completion of the
single audit to properly report expenditures on the SEFA. Closing procedures should be in place
to reconcile grant expenditures incurred at year-end, confirm the amount as eligible with the
grantor, claim the grant revenues on a timely basis, reconcile the claim to the general ledger, and
ensure the expenditures that will be claimed under federal awards are properly reported on the
SEFA and audited financial statements prior to the start of the single audit. If expenditures reported
on the SEFA are misstated, the County could fail to have a program appropriately identified as a
major program and tested as a major program during the single audit. Failure to have a program
audited during the single audit would result in noncompliance with Title 2 U.S. Code of Federal
Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit
Requirements for Federal Awards (Uniform Guidance).
Cause: Closing procedures were not in place and management did not effectively communicate
with County departments responsible for administering federal awards to identify all federal grant
related activity.
Effect: The SEFA required material adjustments to include all federal expenditures prior to the
single audit beginning, which resulted in a misstated preliminary SEFA and inefficiencies during
the single audit.
Questioned Costs: No costs have been questioned as a result of this finding.
Recommendation: We recommend that management meet with department heads throughout the
year and during the closing process to identify all expenditures under federal awards. Training
should be provided to all staff to make sure they are aware of the importance of accurately
reconciling and claiming grant expenditures on a timely basis and providing the information to
management for inclusion on the SEFA.
Views of Responsible Officials: The County will work to improve closing processes and
communications with various departments to ensure the SEFA is complete and accurate.